A new product's chief uncertainty is its annual net revenue. So far, $35,000 has been spent on

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A new product's chief uncertainty is its annual net revenue. So far, $35,000 has been spent on development, but an additional $30,000 is required finish development. The firm's interest rate is 10%.

(a) What is the expected PW for deciding whether to proceed?

(b) Find the P(loss) and the standard deviation for proceeding.

State Bad OK Great 0.2 0.5 Probability Net revenue Life, in years 0.3 $15,000 $20,000 -$15,000 5 5 10

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Engineering Economics

ISBN: 9780195168075

9th Edition

Authors: Ted G. Feller

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Question Posted: Feb 25, 2010 06:52 AM

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A new product's chief uncertainty is its annual net revenue. So far, $35,000 has been spent on

Question:

State Bad OK Great 0.2 0.5 Probability Net revenue Life, in years 0.3 $15,000 $20,000 -$15,000 5 5 10

Step by Step Answer:

The 35K is a sunk cost and should be ignored a EPW 59...View the full answer

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