**PLEASE ANSWER IN EXCEL WITH DECISION TREE **

A firm that plans to expand its product line must decide whether to build a small or a large facility to produce the new products. If it builds a small facility and demand is low, the net present value after deducting for building costs will be $350,000. If demand is high, the firm can either maintain the small facility or expand it. Expansion would have a net present value of $550,000, and maintaining the small facility would have a net present value of $150,000.

If a large facility is built and demand is high, the estimated net present value is $900,000. If demand turns out to be low, the net present value will be $20,000. The probability that demand will be high is estimated to be .30, and the probability of low demand is estimated to be .70.

Analyze using a tree diagram.

Compute the EVPI. How could this information be used?

Determine the range over which each alternative would be best in terms of the value of P (demand low).