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If a product is successful, the pv of the payoff (at the time the product is brought to market) = $34.1 million. If it fails, the pv of the payoff =...
If a product is successful, the pv of the payoff (at the time the product is brought to market) = $34.1 million. If it fails, the pv of the payoff = $12.1 million. If the product goes directly to market, there's a 60% percent chance of success. Alternatively, we can delay the launch a year & spend $1.31 million to increase the probability of success to 90 percent. The appropriate discount rate is 10 percent. Calculate the NPV of going directly to market and the NPV of test-marketing before going to market._____ Which should we choose?______
