The Consumer-Mart Company is going to introduce a new consumer product. If it is brought to market without research about consumer tastes, the firm believes that there is a 60 percent chance that the product will be successful. If successful, the project has a NPV = $518,000. If the product is a failure (40 percent) and withdrawn from the market, then NPV = -$118,000. A consumer survey will cost $64,500 and delay the introduction by one year. With a survey, there is an 80 percent chance of consumer acceptance, in which case the NPV = $518,000. If, on the other hand, the product is a failure (20 percent) and withdrawn from the market, then NPV = -$118,000. The discount rate is 10 percent. By how much does the marketing survey change the expected net present value of the project? Multiple Choice Decreases the NPV by $7,668 Increases the NPV by $27,173 Decreases the NPV by $27,173 Increases the NPV by $10,673

The Consumer-Mart Company is going to introduce a new consumer product. If it is brought to market without research about consumer tastes, the firm believes that there is a 60 percent chance that the product will be successful. If successful, the project has a NPV = $518,000. If the product is a failure (40 percent) and withdrawn from the market, then NPV = -$118,000. A consumer survey will cost $64,500 and delay the introduction by one year. With a survey, there is an 80 percent chance of consumer acceptance, in which case the NPV = $518,000. If, on the other hand, the product is a failure (20 percent) and withdrawn from the market, then NPV = -$118,000. The discount rate is 10 percent. By how much does the marketing survey change the expected net present value of the project? Multiple Choice Decreases the NPV by $7,668 Increases the NPV by $27,173 Decreases the NPV by $27,173 Increases the NPV by $10,673

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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