Osceola Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the present value of the payoff (at the time the product is brought to market) is $27.5 million. If the HD DVD fails, the present value of the payoff is $6.9 million. If the product goes directly to market, there is a 60 percent chance of success. Alternatively, Osceola can delay the launch by one year and spend $1.43 million to test-market the HD DVD. Test-marketing would allow the firm to improve the product and increase the probability of success to 80%. The appropriate discount rate is 10%. What is the NPV of going directly to market? (Round answer to 2 decimal places. Do not round intermediate calculations)
NPV of going directly to market = 0.6*27,500,000 + 0.4*6,900,000
NPV of going directly to market = 16,500,000 + 2,760,000
NPV of going directly to market = $19,260,000.00
Osceola Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the...
Osceola Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the present value of the payoff (at the time the product is brought to market) is $31.9 million. If the HD DVD fails, the present value of the payoff is $5.8 million. If the product goes directly to market, there is a 60 percent chance of success. Alternatively, Osceola can delay the launch by one year and spend $1.16 million to test-market the HD DVD....
Need help solving this question Osceola Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the present value of the payoff (at the time the product is brought to market) is $29.9 million. If the HD DVD fails, the present value of the payoff is $6.6 million. If the product goes directly to market, there is a 60 percent chance of success. Alternatively, Osceola can delay the launch by one year and spend $1.42 million...
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