Ang Electronics Inc has developed a new DVDR$.$ If the DVDR is successful, the present

value of the payoff $($when the product is brought to the market$)$ is $$11$ million. If the DVDR

fails, the present value of the payoff is $$2$ million. If the product goes directly to the market,

there is a $50$ percent chance of success. Alternatively, Ang can delay the launch by one year

and spend $$1\mathrm{.}5$ million to test market the DVDR$.$ Test marketing would allow the firm to

improve the product and increase the probability of success to $60$ percent. The appropriate

discount rate is $11$ percent. What is the value of the option to delay? $($in millions$)$

$$0\mathrm{.}60$

$$0\mathrm{.}00$

$($$$1\mathrm{.}33)$

$$6\mathrm{.}50$