h 9 Problem Homework Question 4 of 7 -/1 E View Policies Current Attempt in Progress Spectrum Hair Salon is considering expanding its business, as it is experiencing a large growth. The question is whether it should expand with a bigger facility than needed, hoping that demand will catch up, or with a small facility, knowing that it will need to reconsider expanding in three years. The management at Spectrum has estimated the following chances for demand: the likelihood of demand being high is 0.70; the likelihood of demand being low is 0.30. Estimated profits for each alternative are as follows: large expansion has an estimated profitability of either $96,000 or $71,000, depending on whether demand turns out to be high or low; small expansion has a profitability of $51,000, assuming that demand is low; small expansion with an occurrence of high demand would require considering whether to expand further. If the business expands at this point, the profitability is expected to be $85,000. If it does not expand further, the profitability is expected to be $60.000 Ch 9 Problem Homework Question 4 of 7 -/1 wwuuuu Solve the decision tree, EVsmall expansion -$ EVierge expansion -$ eTextbook and Media What should Spectrum do? Company should opt for the expansion now. e Textbook and Media