A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm$$s capacity. The contractor must now make a decision on capacity for next year. Estimated profits under each of the two possible states of nature are as shown in the table below. Suppose after a certain amount of discussion, the contractor is able to subjectively assess the probabilities of low and high demand as follows:

P$($low$)=0\mathrm{.}4$ and P$($high$)=0\mathrm{.}6.$

Alternative Next year$$s demand is LOW Next year$$s demand is High

Do nothing $ $50,000$ $ $60,000$

Expand $ $20,000$ $ $90,000$

Subcontract $ $40,000$ $ $70,000$

$16.$ Determine the expected profit of Expand. $(1$ pt$)$

$17.$ Which alternative is best? $(1$ pt$)$

$18.$ Compute the expected value of perfect information. $(2$ points$)$