~~For the large plant
Prob(High Dem.) = 0.5 and Outcome = 10,00,000
Prob (Med Dem.) = 0.3 and Outcome = 6,00,000
Prob (Low Dem.) = 0.2 and Outcome = -20,000
So
Profit/Loss = Total Invt(28,00,000) – { (0.5 * 10,00,000) + (0.3 * 6,00,000) + (0.2 * - 20,000)} = 28,00,000 – {6,76,000} = 21,24,000
For the small plant
Prob(High Dem.) = 0.5 and Outcome = 2,50,000
Prob (Med Dem.) = 0.3 and Outcome = 4,50,000
Prob (Low Dem.) = 0.2 and Outcome = 5,50,000
So
Profit/Loss = Total Invt(14,00,000) – { (0.5 * 2,50,000) + (0.3 * 4,50,000) + (0.2 * 5,50,000)} = 14,00,000 – {3,70,000} = 10,30,000