Question 4: A Chemical company has to expand its production capacity to cater its growing local and international market. It has to decide between a large plant and a small plant to be built to address the increasing demand. This is all that must be decided now. But if the company chooses to build a small plant, and then finds demand high during the initial period for two years, it has to expand its plant further. In making decisions, company executives must take account of the probabilities, costs, and returns which appear likely. On the basis of the data now available to them, and assuming no important changes in the company's situation, perform the following: (1) Develop a decision tree analysis for the Chemical company for this potential investment; (15) (1) Determine the net expected monetary value EMV (revenue - cost), and decide which alternative should the company [10] Table Q4-1 Probabilities Alternatives High average demand 0.6 Large Plant (cost 3.0 million OMR) High initial demand (2 yrs). low succeeding demand (8 Payoff per year (OMRyear) 1,173,130 (for 10 yrs) 1,000,000 first 2 yrs) 100,000 (succeeding yrs) 100,000 (for 10 yrs) 549,423 first 2 yrs) yrs) Low average demand 0.3 Small Plant (cost 1.3 million OMR) High initial demand average initial average Low Idemand 400,000 for 10 yrs)