1.If Acme company (HW_05.xlsx) makes the following changes from our demonstrated example in its bid: 1) change the fixed cost to $8000; 2) change probabilities of Great, Fair and Awful to 0.55, 0.30, and 0.15 respectively; 3) the unit margin is $15.

(Please note that all changes have been reflected in Hw_05.xlsx)

Please reconsider that

1)whether Acme company should market the new product or abandon it, and 2) perform the sensitivity analysis if all sales volumes are decreased by 5%, 10%, 15%, and 20%.

Acme single-stage new product decision Decision 1: Continue development and market the new product % decrease in all sales volumes 0% Fixed cost $8,000 EMV for decision 1 Unit margin $15 sensitivity analysis to percentage decrease in all sales volumes Market Probability Sales volume Net revenue %decrease EMV for decision 1 Great 0.55 600 Fair 0.30 300 5% Awful 0.15 90 10% 15% EMV 20% 3 Decision 2: Stop development and abandon product 5 No payoffs, no costs, no uncertainty 6 EMV 8