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 is10%
(a) What is the expected PW for deciding whether to proceed?
(b) Find the P(loss) and the standard deviation for proceeding.

Transcribed Image Text:

State Bad OK Great 0.2 $15,000 $15.000 $20,000 10 0.3 0.5 Probability Net revenue Life, in years