MakeStuff Company the MakeStuff Company's Earnings Stream Is Highly Dependent on the on the Cost

MakeStuff Company
The MakeStuff Company's earnings stream is highly dependent on the cost of a key commodity input. Management believes taxable earnings will be $100,000 if the input price is low, taxable earnings will be $50,000 if the input price is at a moderate level, but earnings will be zero if the input price is high. Management sees these outcomes as being equally likely. The company pays a 15% tax rate on the first $50,000 of taxable earnings, and a 25% rate on all earnings above $50,000.
-What is MakeStuff's expected after tax earnings if it remains unhedged?

A) $50,000
B) $42,500
C) $80,000
D) $40,833