As a plant manager of a firm, you are trying to decide whether to open a new

Question:

As a plant manager of a firm, you are trying to decide whether to open a new factory outlet store, which would cost about $500,000. Success of the outlet store depends on demand in the new region. If demand is high, you expect to gain $1 million per year; if demand is average, the gain is $500,000; and if demand is low, you lose $80,000. From your knowledge of the region and your product, you feel that the chances are 0.4 that sales will be average and equally likely that they will be high or low (0.3, respectively). Assume that the firm's is known to be 15%, and the marginal tax rate will be 40%. Also, assume that the of the store at the end of 15 years will be about $100,000. The store will be depreciated under a 39-year property class.
(a) If the new outlet store will be in business for 15 years, should you open it? How much would you be willing to pay to know the true state of nature?
(b) Suppose a market survey is available at $1,000. with the following reliability (the values shown were obtained from past experience, where actual demand was compared with predictions made by the survey):

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