Microvehicles is a new company which sells electric scooters.

They are weighing their options to

enter the market in Jamshedpur. If they enter the market, they have two options, either of a limited
franchisee, or of a full dedicated presence. They may, of course, also not enter the market at all. A
limited franchisee will cost them Rs.2 crores, while a full dedicated presence will cost them Rs.5
crores.

They believe that there are three possibilities: either the customer response will be highly
favourable, or moderately favourable, or unfavourable. In case they open a limited franchisee, they
expect revenues of Rs.4 crores if the market is highly favourable, Rs.2 crores if the market is
moderately favourable and Rs.1 crore if the market is unfavourable. For a full dedicated presence,
the expected revenues are Rs.10 crores, Rs.7 crores and Rs.1 crore respectively in the same
scenarios. What should they do?

They have computed the probabilities of these three states to be 0.3, 0.4 and 0.3, respectively. (At
the beginning, we are ignoring it.)