John Is Trying to Decide Whether to Expand His Business

Multiple Choice

John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance his revenue will be $100,000 and a 50 percent chance his revenue will be $300,000. If he does expand, it will cost him $150,000, and there is a 30 percent chance his revenue will be $100,000; a 30 percent chance his revenue will be $300,000; and a 40 percent chance his revenue will be $500,000.If John decides to expand based on expected value, it means that:

A) the difference in expected revenue from expanding versus not expanding must be greater than $150,000.
B) the expected revenue from not expanding must be less than $150,000.
C) the difference in expected revenue from expanding versus not expanding must be less than $150,000.
D) the expected revenue from expanding must be greater than $150,000.