Question: Consider a scenario where a decision is being made whether to invest $ 1 0 0 , 0 0 0 to prototype a project deliverable

Consider a scenario where a decision is being made whether to invest $100,000 to prototype a project deliverable or to not prototype a project deliverable, instead proceeding to develop the final deliverable immediately. For each decision, the successful operation of the project deliverable, which is uncertain and represents a chance node, must be accounted for. If the project deliverable is successful, it is expected that the project will generate $500,000 in revenue. If no prototype is created, the likelihood of project deliverable failure is 80% and the cost impact would be $250,000. Since with a prototype, design changes can be implemented easier, the likelihood of a subsequent project deliverable failure is 30% and the cost impact would be $50,000.

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