ABC Co is considering the launch of a new widget. If the product goes directly to the market, there is a 60% chance of success. For $150,000 the manager can conduct a focus group that will increase the probability of success to 70%. Alternatively, the manager can pay a consulting firm $400,000 to research the market and refine the product. The consulting firm successfully launches new products 75% of the time. If the firm successfully launches the widget, the payoff will be $2 million. If the product is a failure, the NPV is $0.

Calculate the expected NPV if the managers hire the consulting firm.

Based on your analysis, ABC should:

		cannot be determined
		hire the consulting firm
		conduct a focus group
		take the product directly to market