Question
2. Your company invested $10 million in R&D (research and development) to create a new product. When the R&D project started, expected revenues were $22
2. Your company invested $10 million in R&D (research and development) to create a new product. When the R&D project started, expected revenues were $22 million. Now the R&D money has been spent and there are two problems. First, the R&D project is not complete; an additional $5 million is needed to finish the product development effort. Second, a competitor has developed a similar product, reducing expected revenues to $14 million. Given these facts, should the company spend the additional $5 million to finish the R&D project? Why or why not? Based on your recommended course of action, what is the expected overall profit (or loss) for this project?
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