According to the sales manager, improving the quality of their sneakers could potentially resulting in an annual increase in yearly profits as shown in the table below. Payoff table for investment in R&D Increase in annual profits Year 1 30,000 Year 2 35,000 year 3 75,000 Year 4 200,000 Year 5 255,000 Year 6 220,000 Expansion into the children's market Westminster sneakers are unknown in the children's market, and several other companies are already selling children's shoes, including sneakers. However, only some of the existing companies selling children's shoes operate exclusively in the quality segment, and none specialises in sneakers. Existing data suggests that in the first 3 years, additional sales would be extremely low and can be assumed to be zero. However, from year 4 onwards, Westminster Sneakers could capture 20% of the children's market. The total market size is currently 50,000 pairs of sneakers annually. Good quality sneakers are sold for 62,50. Westminster sneakers can purchase them for 45. Their distributor charges 5 per pair of sneakers