Decision Trees The manager for a growing firm is considering the launch of a new

product. If the product goes directly to market, there is a $50$ percent chance of success.

For $$175,000$ the manager can conduct a focus group that will increase the product$$s

chance of success to $65$ percent. Alternatively, the manager has the option to pay a

consulting firm $$375,000$ to research the market and refine the product. The consulting

firm successfully launches new products $80$ percent of the time. If the firm successfully

launches the product, the payoff will be $$2\mathrm{.}3$ million. If the product is a failure, the NPV

is zero. Which action will result in the highest expected payoff to the firm?