A group of investors must decide whether to arrange for the financing to build a new arena or to continue holding its sports promotions at the gym of a community college. They figure that if the new arena is built and they can get a pro basketball franchise, there will be a profit of $2050000 over the next five years. If the new arena is built and they cant get a pro basketball franchise, there will be a $500,000. If the new arena is not built and they get a pro basketball franchise there will be a profit of 1000000 and if there new arena is not built and they cant get a pro basketball franchise, there will be a profit of only 100000 from other promotions.
Question:
If the investors believe the sports editor of a local newspaper who tells them that the odds are really only 3 to 2 against their getting the franchise, what should they decide to do so as to maximize the expected profit over the next five years?