A company has formalized a new-product concept and must now decide whether to provide for long-range production capacity in its five-year plan. The company has three opportunities for profiting from the new product: sell the idea outright now to another company, lease the concept for a royalty, or develop the product in-house. If the concept is sold outright, it will bring $1,500,000. A consulting firm has surveyed the potential markets for the idea. If the concept is leased for royalty, two companies have submitted proposals and this information apices:

If the company develops the concept into a new product, it can sell the rights to the product. If this alternative is selected. This information applies:

If the company develops the new product and then produces and markets it , this information applies:

Use a decision three analysis and recommend a course of action for this new product idea. Show the payoffs expected for each alternative.

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Size of Market Probability Payoffs COMPANYA Large $2,800,0o Marginal 5 2200,000 COMPANYB Large 5 2.600,000 Marginal 2.300,000 Size of Market Probability Payoffs COMPANYA Large $2,800,0o Marginal 5 2.200,000 COMPANY B Large 5 2.600,000 Marginal 2300,000 Size of Market Probubility Payof Large Marginal $2500,00 200,000 Size of Market Probability Payoffs Large Marginal 5 $3,000,000 1,800,000