Soundsoft is a small software firm that creates digital audio editing software for the music industry. They are able to compete with more established players because of a few unique (patented) features previously only available in the Sountsoft product offering. Recently, a well-established competitor, Digimax, has released a product that imitates several of these patented features. Soundsoft fears that Digimax's size and market access will drive Soundsoft out of the market. + As a response, Soundsoft filed a patent infringement suit against Digimax and received a $1.5 million settlement offer. If Soundsoft chooses to accept the settlement they will incur negligible legal fees. Soundsoft's legal team advises her that Soundsoft has approximately 60% chance of winning a court proceeding, with an expected payout of $5 million in damages (but still incur its own legal fees) and a court order to prevent Digimax from marketing the patented features. It also warns that if Soundsoft loses the suit, it has a 50% chance (based on historical precedent) that the judge will order Soundsoft to pay Digimax's legal fees. An in-court battle will cost Digimax around $1 million, and likely the same for Soundsoft. Write a memo to the Soundsoft Board of Directors illustrating the situation and recommending a course of action. Be sure to comment on non-financial issues at stake. t In your analysis/memo, be sure to: Build and solve a decision tree Conduct sensitivity analysis assuming that any of the estimates in this scenario may reflect up to +/-20% error Briefly address any non-quantitative aspects that may affect your decision-making Illustrate the options and potential end-states in a table (that the lay person can interpret - someone who is not familiar with decision trees) Verbally summarize your findings and recommend a course of action- + QUESTION 8 Upon review of predictions made by this market research firm, it was found that their recommendations tend to be optimistic. In 60% of past studies, the firm is approximately correct. In 30% of past studies, the firm overestimated profit by 10%. Finally in the remaining 10% of studies, the firm drastically overestimated profit by around 25%. In hindsight, do you think that it was a value-generating decision to hire the firm? O Yes O No QUESTION 9 Write a memo to the Soundsoft Board of Directors illustrating the situation and recommending a course of action. Be sure to comment on non-financial issues at stake. The file format should be PDF or Word. In your analysis/memo, be sure to: Build and solve a decision tree Conduct sensitivity analysis assuming that any of the estimates in this scenario may reflect up to +/-20% error Briefly address any non-quantitative aspects that may affect your decision-making Illustrate the options and potential end-states in a table (that the lay person can interpret - someone who is not familiar with decision trees) Verbally summarize your findings and recommend a course of action Soundsoft is a small software firm that creates digital audio editing software for the music industry. They are able to compete with more established players because of a few unique (patented) features previously only available in the Sountsoft product offering. Recently, a well-established competitor, Digimax, has released a product that imitates several of these patented features. Soundsoft fears that Digimax's size and market access will drive Soundsoft out of the market. + As a response, Soundsoft filed a patent infringement suit against Digimax and received a $1.5 million settlement offer. If Soundsoft chooses to accept the settlement they will incur negligible legal fees. Soundsoft's legal team advises her that Soundsoft has approximately 60% chance of winning a court proceeding, with an expected payout of $5 million in damages (but still incur its own legal fees) and a court order to prevent Digimax from marketing the patented features. It also warns that if Soundsoft loses the suit, it has a 50% chance (based on historical precedent) that the judge will order Soundsoft to pay Digimax's legal fees. An in-court battle will cost Digimax around $1 million, and likely the same for Soundsoft. Write a memo to the Soundsoft Board of Directors illustrating the situation and recommending a course of action. Be sure to comment on non-financial issues at stake. t In your analysis/memo, be sure to: Build and solve a decision tree Conduct sensitivity analysis assuming that any of the estimates in this scenario may reflect up to +/-20% error Briefly address any non-quantitative aspects that may affect your decision-making Illustrate the options and potential end-states in a table (that the lay person can interpret - someone who is not familiar with decision trees) Verbally summarize your findings and recommend a course of action- + QUESTION 8 Upon review of predictions made by this market research firm, it was found that their recommendations tend to be optimistic. In 60% of past studies, the firm is approximately correct. In 30% of past studies, the firm overestimated profit by 10%. Finally in the remaining 10% of studies, the firm drastically overestimated profit by around 25%. In hindsight, do you think that it was a value-generating decision to hire the firm? O Yes O No QUESTION 9 Write a memo to the Soundsoft Board of Directors illustrating the situation and recommending a course of action. Be sure to comment on non-financial issues at stake. The file format should be PDF or Word. In your analysis/memo, be sure to: Build and solve a decision tree Conduct sensitivity analysis assuming that any of the estimates in this scenario may reflect up to +/-20% error Briefly address any non-quantitative aspects that may affect your decision-making Illustrate the options and potential end-states in a table (that the lay person can interpret - someone who is not familiar with decision trees) Verbally summarize your findings and recommend a course of action