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Expando, Inc., is considering the possibility of building anadditional factory that would produce a new addition to theirproduct line. The company is currently considering two options. Thefirst is a small facility that it could build at a cost of $6million. If demand for new products is low, the company expects toreceive $10 million in discounted revenues (present value of futurerevenues) with the small facility. On the other hand, if demand ishigh, it expects $12 million in discounted revenues using the smallfacility. The second option is to build a large factory at a costof $9 million. Were demand to be low, the company would expect $10million in discounted revenues with the large plant. If demand ishigh, the company estimates that the discounted revenues would be$14 million. In either case, the probability of demand being highis .40, and the probability of it being low is .60. Notconstructing a new factory would result in no additional revenuebeing generated because the current factories cannot produce thesenew products.

a.	Calculate the NPV for the following: (Leave no cellsblank - be certain to enter "0" wherever required. Enter youranswers in millions rounded to 1 decimal place.)

Plans	NPV
Small facility	$	million
Do nothing		million
Large facility		million

b.	The best decision to helpExpando is

to build the small facility. to build the large facility. to do nothing.