Ang 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 $34.8 million. If the HD DVD
fails, the present value of the payoff is $12.8 million. If the
product goes directly to market, there is a 40 percent chance of
success. Alternatively, the company can delay the launch by one
year and spend $1.38 million to test-market the HD DVD.
Test-marketing would allow the firm to improve the product and
increase the probability of success to 70 percent. The appropriate
discount rate is 12 percent.
Calculate the NPV of going directly to market and the NPV of
test-marketing before going to market. (Enter your answers
in dollars, not millions of dollars. Do not round intermediate
calculations and round your answers to nearest whole dollar amount,
e.g., 1,234,567.)
NPV | |
Go to market now | $ |
Test-marketing first | $ |
Should the firm conduct test-marketing?
No
Yes
Ang 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....
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....
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.4 million. If the DVDR fails, the present value of the payoff is $11.4 million. If the product goes directly to market, there is a 60 percent chance of success. Alternatively, Ang can delay the launch by one year and spend $1.24 million to test market the DVDR. Test marketing would allow the...
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.5 million. If the DVDR fails, the present value of the payoff is $11.5 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.25 million to test market the DVDR. Test marketing would allow...
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.1 million. If the DVDR fails, the present value of the payoff is $11.1 million. If the product goes directly to market, there is a 60 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.21 million to test market the DVDR. Test marketing would allow...
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.7 million. If the DVDR fails, the present value of the payoff is $11.7 million. If the product goes directly to market. there is a 60 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.27 million to test market the DVDR. Test marketing would allow...
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $34.3 million. If the DVDR fails, the present value of the payoff is $12.3 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.33 million to test market the DVDR. Test marketing would allow...
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...
Need help solving these questions Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $328,420 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,760,000. The cost of the machine will decline by $110,000 per year until it reaches $1,320,000, where...
payoff is $180 million (PV at the time the product is brought to market). If the product fails, the present value of the payoff is $30 milion. The company considers two alternatives: (a) going directly to market; (b) conduct test marketing and improve the product. If the product goes directly to market, there is a 50% chance of success. Alternatively, if the company waits a year and spends $15 million now to perform test marketing and improving the 15%. Should...