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A pharmaceutical company is developing a new drug that has a 40% chance of being approved by the FDA. If the drug is approved, the
A pharmaceutical company is developing a new drug that has a 40% chance of being approved by the FDA. If the drug is approved, the company will make a profit of $5 million, but if it is not approved, the company will lose $2 million. The company has the option to conduct additional tests that will increase the probability of approval to 70%, but these tests will cost $1 million. Should the company conduct the additional tests?
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Complete Business Statistics
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