Business, 18.03.2021 01:20 paytonthalacker
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $34.7 million. If the DVDR fails, the present value of the payoff is $12.7 million. If the product goes directly to market, there is a 60% chance of success. Alternatively, the company can delay the launch by one year and spend $1.37 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 90%. The appropriate discount rate is 10%. Calculate the NPV of going directly to market and the NPV of test marketing before going to market.
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Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the...
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