Saved Help Save & EXIT = Strategic Capacity Management Ho. Check my work 3 Problem 5-8 5 points Rook Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $8 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, If demand is high, it expects $12 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $11 million Were demand to be low, the company would expect $12 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $16 million in either case, the probability of demand being high is 0.30, and the probability of it being low is 0.70. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products. a. Calculate the NPV for the following: (Leave no cells blank - be certain to enter "o" wherever required. Enter your answers in millions rounded to 1 decimal place.) Hint Print References Plans Small facility Do nothing Large facility NPV $ 2.8 million 0 million $ 2.6 million b. The best decision to help Expando is O to build the small facility. Oto do nothing O to build the large facility V Mc Graw Hill