Ang Electronics has developed a new wearable ring that continually checks blood pressure during the day. If the ring is successful, the present value of the pay-off (when the product is brought to market) is 20 million. If the ring fails, the present value of the pay-off is 5 million. If the product goes directly to market, there is a 50 per cent chance of success. Alternatively, Ang can delay the launch by one year and spend 2 million to test market the ring. Test marketing would allow the firm to improve the product and increase the probability of success to 75 percent. The appropriate discount rate is 15 percent.

1. Calculate the NPV when you directly go to the market.

2. Calculate the NPV if you test the marketing

2. Ang Electronics should conduct test marketing?