EKG Software Development Corporation has determined that it needs to expand its current capacity. The decision has come down to whether to expand now with a large facility, incurring additional costs and taking the risk that the demand will not materialize, or to undertake a small expansion, knowing that the decision will have to be reconsidered in five years. Management has estimated the following chances for demand:

$$ The likelihood of demand being high is $0\mathrm{.}60.$

$$ The likelihood of demand being low is $0\mathrm{.}40.$

Profits for each alternative have been estimated:

$$ Large expansion has an estimated profitability of either $$1,000,000$ or $$600,000,$ depending on whether demand turns out to be high or low.

$$ Small expansion has a profitability of $$500,000,$ assumming that demand is low.

$$ Small expansion with an occurrence of high demand would require considering whether to expand further.

If the company expands at that point, the profitability is expected to be $$700,000.$

If it does not expand further, the profitability is expected to be $$500,000.$