9. Miama Company, which requires a 12% return on all its new products, is considering launching a new product. There is a 70% chance that the product will generate income of $200,000 per year for the next 10 years, and a 30% chance that it will generate income of only $17,500 per year for the next 10 years. Miama must develop the production technology to produce the product before it can do focus group testing, which would indicate whether demand would be high or low. If Miama were to decide not to produce the product, the production technology could be sold for $100,000 at any time after it is developed.

Consider the project to start when focus testing occurs. Determine the present value of cash flows if there is high demand and Miama continues with product sales, if there is high demand and Miama sells the production technology, if there is low demand and Miama continues with product sales, and if there is low demand and Miama sells the production technology.