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2. Mr. del mundo, the President of RFC Corporation is faced with deciding whether to purchase a patent to develop a new product or not.

2. Mr. del mundo, the President of RFC Corporation is faced with deciding whether to purchase a patent to develop a new product or not. If the company purchases the patent, it should develop the product. The selling price of the patent is P50,000. There are two ways of developing a product: the Modern and the Traditional Method. It costs P20,000 to use the Modern Method, and P15,000 for the Traditional Method. The probability of success in the Modern Method is 60%, while it is 70% for the Traditional Method. If the product is successfully developed, it will give an income of P500,000. Should the company purchase the patent? If so, what method of development should be used?

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