John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. The difference in expected earnings if John chooses to expand versus not expand is:
A. $120,000.
B. $200,000.
C. $320,000.
D. $150,000.
Answer: A
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