Question

You’re the manager of global opportunities for a U.S. manufacturer, who is considering expanding
sales into Europe. Your market research has identified three potential market opportunities:
England, France, and Germany. If you enter the English market, you have a 0.5 chance of big
success (selling 100,000 units at a per-unit profit of $8), a 0.3 chance of moderate success (selling
60,000 units at a per-unit profit of $6), and a 0.2 chance of failure (selling nothing). If you enter
the French market, you have a 0.4 chance of big success (selling 120,000 units at a per-unit profit
of $9), a 0.4 chance of moderate success (selling 50,000 units at a per-unit profit of $6), and a 0.2
chance of failure (selling nothing). If you enter the German market, you have a 0.2 chance of
huge success (selling 150,000 units at a per-unit profit of $10), a 0.5 chance of moderate success
(selling 70,000 units at a per-unit profit of $6), and a 0.3 chance of failure (selling nothing). If you
can enter only one market, and the cost of entering the market (regardless of which market you
select) is $250,000, should you enter one of the European markets? If so, which one? If you enter,
what is your expected profit?