Unformatted text preview: it will be too late to investigate the use of the expertise in design of the new product. Without the expertise Magnatree has a 20% chance of making the new product a huge success. With Shadycorp’s expertise there will be a 40% chance of the new product being a huge success. If the new product is a huge success, the net present value of its future profits is expected to be $50 million. If it is merely a success, the net present value of its future profits is expected to be $20 million. 1.1) Construct a decision tree and solve it. 1.2) Should Magnatree accept Shadycorp’s offer? 1.3) What is the expected net present value of its future profits from the new product?...
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This note was uploaded on 10/17/2011 for the course MNGT 368 taught by Professor Curthurds during the Spring '08 term at Nicholls State.
- Spring '08