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A firm has to decide whether to (1) stay with current machine as it is, or...

A firm has to decide whether to (1) stay with current machine as it is, or (2) upgrade it with an enhancement, or (3) buy a new machine.  Cost of upgrade is $1000, and the cost of a new machine is $8000.  Revenues are estimated as follows, based on the performance of the economy next year:

stagnant economy

growth economy

no change

8000

8000

upgrade

8500

10000

new machine

8500

18000

It is estimated that the probability of a stagnant economy next year is 0.79 (so probability of a growth economy is 1 - 0.79).

What is the highest expected payoff among the three alternatives? (Note: need the value of the highest expected payoff, not the name of the alternative with the highest expected payoff)

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