Johnson Chemicals, Inc., who is subject to a marginal state and federal tax rate of 30 percent, is considering two mutually exclusive alternatives. The first alternative, 1, is to hire a public accounting firm at a cost of $5,000 to undertake research on a tax avoidance plan. If the plan is successful, it will save the corporation $4,900 in federal income taxes. The probability of success for the plan is 75 percent. The second alternative, 2, is to hire a marketing firm at a cost of $4,500 to develop a new marketing strategy. If it is successful, the new marketing strategy would generate new revenues of $5,500. The probability of such success is 80 percent.

Which alternative should the corporation choose?