Jason & Sons, a manufacturer of exercise equipment is investigating the possibility of

expanding the business over the next $3$ years. Undertaking this project will require either moving to a

new site now or expand store at the current site now. Also, the company has the option of do nothing

and reconsider the expansion option $($at the current site$)$ one year later if a strong growth is observed.

The demand will have a strong growth with a probability of $0\mathrm{.}6$ and a weak growth with a probability

of $0\mathrm{.}4.$ Move to the new site would cost $$200,000$ and expansion at the current site only costs $$90,000$

$($do nothing costs $$0).$ The annual return of the company depends on the owner$$s decision and the

demand realization:

Annual Return

Strong growth Weak growth

Owner$$s Decision

Move $$190,000$ $$112,000$

Expand $$175,000$ $$100,000$

Do nothing $$160,000$ $$105,000$