If Hamper Co conducts market research it will know for certain whether the forecast sales from a new product would be high or low. If the volume sold is high, contribution of $1,200,000 per year would be made. If the volume sold is low, contribution of $700,000 per year would be made. Based on past experience there is an 80% chance of the new product sales being high and 20% chance of product sales being low. Incremental fixed costs are estimated to be $800,000 per year. Hamper Co only accepts a project if it is for a new profitable product. 

What is the maximum that Hamper Co should pay for this market research?

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To determine the maximum amount that Hamper Co should be willing to pay for market research we can u... View the full answer