Question: 27.) Sharp ElectroInc. has developed a new SuperHiDef DVD player. If the player is successful, the present value of the payoff is $180 million (W


27.) Sharp ElectroInc. has developed a new SuperHiDef DVD player. If the player is successful, the present value of the payoff is $180 million (W at the time the product is brought to market). If the product fails, the present value of the payoff is $30 million. The company considers two alternatives: (a) going directly to market; (b) conduct test marketing and improve the product. If the product goes directly to market, mere is a 50% chance of success. Alternatively, if the company waits a year and spends $15 million now to perform test marketing and improving the product in the process, it will increase the probability of success to 75%. Assume the appropriate discount rate is 15%. Should the rm conduct test marketing? Justify your
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