James? Lawson's Bed and? Breakfast, in a small historic Mississippi? town, must decide how to subdivide?(remodel) the large old home that will become its inn. There are three? alternatives: Option A would modernize all baths and combine? rooms, leaving the inn with four? suites, each suitable for two to four adults. Option B would modernize only the second? floor; the results would be six? suites, four for two to four? adults, two for two adults only. Option C? (the status quo? option) leaves all walls intact. In this? case, there are eight rooms?available, but only two are suitable for four? adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each? option:
Alternatives Annual Profit if Demand High p Annual Profit if Demand Average p
A (modernize all) $96,000 0.50 $25,000 0.50
B (modernize 2nd) $82,000 0.35 $70,000 0.65
C (status quo) $62,000 0.30 $52,000 0.70
This exercise contains only part b.
?b) The option with the highest expected value for James? Lawson's Bed and Breakfast is , with an expected value of
?(round your response to the nearest whole? number).