Being "early to market" with a new product often results in grabbing relatively high levels of market share. A newly noise canceling, high fidelity, specialty headphone with microphone is released for use in noisy control room settin test reviews were excellent. Development costs, adjusted to time 0, are $1,000,000. Quarterly incomes begin at $ of Q1 and ramp up to $400,000, $550,000, and $750,000 over the next three quarters. Then, they begin to drop b quarter for the next two years. Choose a quarter-by-quarter cash flow diagram covering financial results over thre A $750K B $750K $550K $550K $400K $400K $300K Till $300K 10 11 12 End of Quarter $150K (+) 0 (-) $300K 5 8 9 (+) 0 (-)
Being "early to market" with a new product often results in grabbing relatively high levels of market share. A newly noise canceling, high fidelity, specialty headphone with microphone is released for use in noisy control room settin test reviews were excellent. Development costs, adjusted to time 0, are $1,000,000. Quarterly incomes begin at $ of Q1 and ramp up to $400,000, $550,000, and $750,000 over the next three quarters. Then, they begin to drop b quarter for the next two years. Choose a quarter-by-quarter cash flow diagram covering financial results over thre A $750K B $750K $550K $550K $400K $400K $300K Till $300K 10 11 12 End of Quarter $150K (+) 0 (-) $300K 5 8 9 (+) 0 (-)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![Being "early to market" with a new product often results in grabbing relatively high levels of market share. A newly designed wireless,
noise canceling, high fidelity, specialty headphone with microphone is released for use in noisy control room settings. Pre-release Beta
test reviews were excellent. Development costs, adjusted to time 0, are $1,000,000. Quarterly incomes begin at $300,000 at the end
of Q1 and ramp up to $400,000, $550,000, and $750,000 over the next three quarters. Then, they begin to drop by $50,000 per
quarter for the next two years. Choose a quarter-by-quarter cash flow diagram covering financial results over three years.
A
$750K
B
$750K
$550K
$550K
$600K
$400K
$400K
$300K
10 11 12
7
End of
Quarter
$150K
$900K
1 2 3 4 5 6 7 8 9 10
$300K
$400K
$600K
C
0
(-)
$1,000K
$1,000K
(+)
0
$300K
1
(-)
2
4
$550K
$750K
5
6
8 9
11
12
T
End of
Quarter
$450K
D
(+)
0
$300K
1
(-)
$1,000K
(+)
$300K
0 1
(-)
$1,000K
$400K
3
$550K
3
4
$750K
4
6
8
8
9
9](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8d13cc2-ce9c-4343-b636-3ecfdfa333af%2F1014ce3c-27f9-4526-bb3b-84776d9d0a94%2Fceig87d_processed.png&w=3840&q=75)
Transcribed Image Text:Being "early to market" with a new product often results in grabbing relatively high levels of market share. A newly designed wireless,
noise canceling, high fidelity, specialty headphone with microphone is released for use in noisy control room settings. Pre-release Beta
test reviews were excellent. Development costs, adjusted to time 0, are $1,000,000. Quarterly incomes begin at $300,000 at the end
of Q1 and ramp up to $400,000, $550,000, and $750,000 over the next three quarters. Then, they begin to drop by $50,000 per
quarter for the next two years. Choose a quarter-by-quarter cash flow diagram covering financial results over three years.
A
$750K
B
$750K
$550K
$550K
$600K
$400K
$400K
$300K
10 11 12
7
End of
Quarter
$150K
$900K
1 2 3 4 5 6 7 8 9 10
$300K
$400K
$600K
C
0
(-)
$1,000K
$1,000K
(+)
0
$300K
1
(-)
2
4
$550K
$750K
5
6
8 9
11
12
T
End of
Quarter
$450K
D
(+)
0
$300K
1
(-)
$1,000K
(+)
$300K
0 1
(-)
$1,000K
$400K
3
$550K
3
4
$750K
4
6
8
8
9
9
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