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What is the potential value if they release the product next month?

What is the potential value if they release the product next month?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A tech startup developed a new product for its customers. It needs to decide whether to launch it next month or wait for nine months. The company discovers the success rate for options, along with their potential revenue. It also learns the probability of failure and corresponding losses for each. . . Option A: Launch next month has a 55% probability of success with potential revenue of $250,000. It has a 45% failure rate with a potential loss of $125,000. Option B: Launch in nine months has a 65% probability of success with potential revenue of $400,000. It has a 35% failure rate with a potential loss of $200,000. What is the potential value if they release the product next month?
Transcribed Image Text:A tech startup developed a new product for its customers. It needs to decide whether to launch it next month or wait for nine months. The company discovers the success rate for options, along with their potential revenue. It also learns the probability of failure and corresponding losses for each. . . Option A: Launch next month has a 55% probability of success with potential revenue of $250,000. It has a 45% failure rate with a potential loss of $125,000. Option B: Launch in nine months has a 65% probability of success with potential revenue of $400,000. It has a 35% failure rate with a potential loss of $200,000. What is the potential value if they release the product next month?
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