In the book Making Hard Decisions: An Introduction to Decision Analysis, Robert T. Clemen presents a decision tree for a research and development decision (note that payoffs are given in millions of dollars, which is denoted by M). Based on this decision tree (shown in Figure 19.8 on the next page), answer the following:
a. Should development of the research project be continued or stopped? Justify your answer by using relevant calculations, and explain your reasoning.
b. If development is continued and if a patent is awarded, should the new technology be licensed, or should the company develop production and marketing to sell the product directly? Justify your answer by using relevant calculations and explain your reasoning.