JMA Manufacturing is considering expanding the company$$s manufacturing capacity at its New Bern plant. Engineering has developed estimates for three expansion plans. A small expansion will cost $$1$ million. A medium$-$sized expansion will cost $$2$ million, while a major expansion will cost $$5$ million.

The income generated by the expansion will depend on the demand for JMA$$s product. Marketing has developed estimates for the net present value $($not including the fixed cost of the capacity expansion$)$ associated with each of the expansion alternatives based on low and high demand scenarios. If JMA decides to go with the small expansion, marketing estimates the company can earn $$0\mathrm{.}5$ million if demand is low and $$2$ million if demand is high. With the medium expansion, income will be $$2$ million $($low demand$)$ and $$3$ million $($high demand$).$ With the large expansion, marketing estimates income will be $$4$ million if demand is low and $$8$ million if demand is high.

Marketing estimates there is a one in three chance the company will experience high demand.

Calculate the Expected Value of the Small Expansion.

$0$

$1$

$0\mathrm{.}5$

$0\mathrm{.}33$

$2$

$-0\mathrm{.}5$