Problem $5$S$-9($Static$)$

A firm must decide whether to construct a small, medium, or large stamping plant. A consultant's report indicates a $20$ probability that

demand will be low and an $80$ probability that demand will be high.

If the firm builds a small facility and demand turns out to be low, the net present value will be $$42$ million. If demand turns out to be

high, the firm can either subcontract and realize the net present value of $$42$ million or expand greatly for a net present value of $$48$

million.

The firm could build a medium$-$size facility as a hedge: If demand turns out to be low, its net present value is estimated at $$22$ million; if

demand turns out to be high, the firm could do nothing and realize a net present value of $$46$ million, or it could expand and realize a

net present value of $$50$ million.

If the firm builds a large facility and demand is low, the net present value will be $-$$$20$ million, whereas high demand will result in a net

present value of $$72$ million.

d$.$ Perform sensitivity analysis on $P($high$).$

Note: Round your Intercept and Slope answers to nearest whole number and EV answer to $2$ decimal places. Negative amount

should be indicated by a minus sign.

Small and large EV same at $x=?$