A bridge is to be constructed now as part of a new road. An analysis has shown that traffic density on the new road will justify a two-lane bridge at...

A bridge is to be constructed now as part of a new road. An analysis has shown that traffic

density on the new road will justify a two-lane bridge at the present time. Because of

uncertainty regarding future use of the road, the time at which an extra two lanes will be

required is currently being studied. The estimated probabilities of having to widen the bridge

to four lanes at various times in future are as follows:

Widen Bridge In (years)=3 ,Probability=0.1

Widen Bridge In (years)=4 ,Probability=0.2

Widen Bridge In (years)=5 ,Probability=0.3

Widen Bridge In (years)=6 ,Probability=0.4

The present estimated cost of the two-lane bridge is $2,000,000. If constructed now,

the four-lane bridge will cost $4,000,000. The future cost of widening a two-lane bridge will

be an extra $2,000,000 plus $250,000 for every year the widening is delayed. If money can

earn 12% per year, what would you recommend?