John is trying to decide whether to expand his business or not.
if he continues his business as it is, with no expansion, there is a 50 percent chance his revenue will be $100,000 and a 50 percent chance his revenue will be $300,000.
if he does expand, there is a 30 percent chance his revenue will be $100,000, a 30 percent chance his revenue will be $300,000 and a 40 percent chance his revenue will be $500,000. it will cost him $150,000 to expand. if john were to expand, which of the following is true?
a. john's expected revenue is $50,000 less than if he didn't expand.
b. john can expect to earn $120,000 in revenue more by expanding, but that is less than the cost of expansion, $150,000.
c. john can expect to earn $120,000 in revenue more by expanding and therefore made the most profitable decision.
d. all of these statements are true.