A Retailer Is Considering Building a Large Store

Multiple Choice

A retailer is considering building a large store. If the local economy experiences expansion, the firm expects the store to earn a $2,000,000 profit next year. If the local economy experiences a contraction, the firm expects the store to lose $400,000 next year. Analysts estimate a 30% chance for the local economy to experience an expansion next year (hence a 70% chance for contraction) . What is the expected monetary value (EMV) of building the large store?

A) $880,000
B) $320,000
C) $2,000,000
D) $80,000
E) $1,520,000