A firm that plans to expand its product line must decide whether to build a small or a large facility to produce the new products. If it builds a small facility and demand is low, the net present value after deducting for building costs will be $400,000. If demand is high, the firm can either maintain the small facility or expand it. Expansion would have a net present value of $450,000, and maintaining the small facility would have a net present value of $50,000.
If a large facility is built and demand is high, the estimated net present value is $800,000. If demand turns out to be low, the net present value will be -$10,000.
Determine the range over which each alternative would be best in terms of the value of P (demand low). (Round your answers to 2 decimal places. Include the indifference probability in your answer ranges. Enter the lower probability in the left answer box and higher probability in the right answer box.)
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