Happy Electronics is developing a new product for which the profit margin will be $5. However,

the development time (in years) is a random variable that follows an exponential distribution

with a parameter = , where is the total investment in this R&D project in million $. For

example, if the total investment is $5 million, then = 5 and the mean development time will

be 1/5 years. The demand will be a function of the development (or introduction) time of this

new product: the later the introduction, the smaller the demand. In particular, demand

=

10,000,000

1 + .

Which of the following statement(s) is(are) true, after running the simulation for 1,000 times?

A) Investing $2 million is better than investing $5 million.

B) Given an investment of $5 million, the expected total profit is larger than $31 million.

C) Given an investment of $8 million, the expected total profit is larger than $31 million.

D) Given an investment of $5 million, the expected total profit is larger than $50 million if the

profit margin is $8.

E) None of the above