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, it will cost him $150,000, and 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.What should John do?
A)Expand, because he expects to earn $320,000 in revenue by expanding and it will only cost him $150,000 to do so.
B)Not expand, because there is a chance he can earn the same amount not expanding without making the $150,000 investment.
C)Not expand, because he expects to earn only $120,000 more revenue by expanding than not, and it will cost him $150,000 to expand.
D)Expand, because he has a 70 percent chance of earning more revenue by expanding than what it will cost to do so.

Question

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The Answer of 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, it will cost him $150,000, and 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.What should John do?
A)Expand, because he expects to earn $320,000 in revenue by expanding and it will only cost him $150,000 to do so.
B)Not expand, because there is a chance he can earn the same amount not expanding without making the $150,000 investment.
C)Not expand, because he expects to earn only $120,000 more revenue by expanding than not, and it will cost him $150,000 to expand.
D)Expand, because he has a 70 percent chance of earning more revenue by expanding than what it will cost to do so.

John Is Trying to Decide Whether to Expand His Business