A research and devel. success of 60% (0 hand development manager associates a probability of of 60% (0.6) with a research investment at time zero being Land generating the need for an additional $300,000 ment investment at the end of year one, which is estimated have a probability of 90% (0.9) of successfully generating profits of $200,000 per year for years two through 10, assuming a washout of escalation of operating costs and sales revenue. If failure occurs after the time zero research investment, a reclamation cost of $100,000 will be realized at the end of year one. If failure occurs after the year one investment, the salvage value will be $250,000 at To achieve a before-tax Chapte the end of year two for equipment salvage. To achi expected ROR of 25% in this investment, use expected analysis to determine how much money can be sper at time zero assuming the year 10 salvage value is zero w risk-free project NPV valuation? can be spent on research 6.9