QUESTION 1 Mixtastic's Founder-CEO is discussing the timing of the launch of its mix-at-home cocktail kit with potential investors. "With a big push and a full-time commitment from myself, we could roll out the subscriptions right away and make $100K in profit per year. Or, if I run the business part-time as a side project, we could start selling three years from now." Assuming Mixtastic has an 80% chance of survival each year, how much would it be worth to start earning profit immediately, rather than in three years? It's worth $80K more if it launches immediately. It's worth $244K more if it launches immediately. It's worth $376K more if it launches immediately. It's worth $1 million more if it launches immediately.
QUESTION 1 Mixtastic's Founder-CEO is discussing the timing of the launch of its mix-at-home cocktail kit with potential investors. "With a big push and a full-time commitment from myself, we could roll out the subscriptions right away and make $100K in profit per year. Or, if I run the business part-time as a side project, we could start selling three years from now." Assuming Mixtastic has an 80% chance of survival each year, how much would it be worth to start earning profit immediately, rather than in three years? It's worth $80K more if it launches immediately. It's worth $244K more if it launches immediately. It's worth $376K more if it launches immediately. It's worth $1 million more if it launches immediately.
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.6P
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Transcribed Image Text:QUESTION 1
Mixtastic's Founder-CEO is discussing the timing of the launch of its mix-at-home cocktail kit with potential investors. "With a big
push and a full-time commitment from myself, we could roll out the subscriptions right away and make $100K in profit per year. Or,
if I run the business part-time as a side project, we could start selling three years from now." Assuming Mixtastic has an 80%
chance of survival each year, how much would it be worth to start earning profit immediately, rather than in three years?
It's worth $80K more if it launches immediately.
It's worth $244K more if it launches immediately.
It's worth $376K more if it launches immediately.
It's worth $1 million more if it launches immediately.
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