Supreme Engineering ltd has developed a new product which has a 10 year expected life. A market study conducted by the company has revealed that a domestic as well as an export market exist for the product. It is also indicated that a small plant will suffice to cater to the domestic demand. However, a large plant will have to be built if export demand also has to be met. The exact magnitude of export market is not known. The company has the option of building a small plant today, and then, after three years decide to expand. The company may decide to expand if the initial demand consisting of both domestic and export is high. Further the company has two options vis--vis its decision to expand: the small plant could be expanded to a large size or a small size. The market study indicates that the chance that the initial demand will be high is 0.6 and low is 0.4. given a high initial demand, there is 0.80 probability that the demand will be high in the subsequent years, and 0.20 probability of demand being low. SEL uses a 10% discount rate for evaluation its investment proposal. Determine the best option to undertake.