Question: A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated

A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated probabilities being 0.25, 0.40, and 0.35, respectively A small facility is expected to earn an after-tax net present value of just $11,000 if demand is low. If demand is average, the small facility is expected to earn $15,000; it can be increased to medium size to earn a net present value of $40,000. If demand is high, the small facility is expected to earn $25,000 and can be expanded to medium size to earn $40,000 or to large size to earn $75,000 A medium-sized facility is expected to lose an estimated $25,000 if demand is low and earn $110,000 if demand is average. If demand is high, the medium-sized facility is expected to earn a net present value of $125,000; it can be expanded to a large size for a net payoff of $135,000. If a large facility is built and demand is high, earnings are expected to be $170,000. If demand is average for the large facility, the present value is expected to be $100,000; if demand is low, the facility is expected to lose $50,000 Choose the correct decision tree below. Note that each payoff is given in thousands (S000). OA VB B. High 0.35 $170 Avg 0.40 $100 High 0.25 $170 Avg 0.40 $100 Low 0.35 $50 Large Meg Avg 0.40 $110 Expand to lng $135 Irg Low 0.25 - $50 High 0.35 Expand to lrg $135 Large High 0.25 Med Avg 0.40 $110 Low 0.35 S25 High 0.25 Do nothing $125 Expand to lng $75 Expand to med 540 Do nothing $25 Expand to med $40 Do nothing $15 Low 0.25 - $25 High 0.35 Small Small Do nothing $125 $ Expand to lrg $75 Expand to med $40 $ Do nothing $25 Expand to med s40 Do nothing $15 Avg 0.40 Low 0.35 S11 Avg 0.40 Low 0.25 $11 O c. OD High 0.35 Expand to lrg $135 High 0.35 $170 Avg 0.40 $100 Low 0.25 - $50 Do nothing o ou $125 Expand torg $135 $ $ Large High 0.35 Med Avg 0.40 $110 Low 0.25 - $25 High 0.35 Small $ Large Avg 0.40 $100 Low 0.25 - $50 High 0.35 $170 /Meg Avg 0.40 5110 Do nothing $125 Expand to lng $75 Expand to me. 540 Low 0.25 - $25 High 0.35 Small Expand to Irg $75 Expand to med $40 Do nothing $25 Expand to med 540 $ Do nothing $15 Do nothing $25 Expand to med 540 Do nothing $15 Avg 0.40 $ Avg 0.40 Low 0.25 S11 Low 0.25 $11 What should management do to achieve the highest expected payoff? The management should build a v in order to achieve the highest expected payoff of $ (Enter your response as a whole number.)