Ang Electronics, Inc., has developed a new HD DVD$.$ If the HD DVD is successful, the

present value of the payoff $($at the time the product is brought to market$)$ is $$33\mathrm{.}7$ million.

If the HD DVD fails, the present value of the payoff is $$11\mathrm{.}7$ million. If the product goes

directly to market, there is a $60$ percent chance of success. Alternatively, the company

can delay the launch by one year and spend $$1\mathrm{.}27$ million to test$-$market the HD DVD$.$

Test$-$marketing would allow the firm to improve the product and increase the probability

of success to $90$ percent. The appropriate discount rate is $10$ percent.

Calculate the NPV of going directly to market and the NPV of test$-$marketing before

going to market. $($Do not round intermediate calculations and enter your answers in

dollars, not millions of dollars, rounded to nearest whole dollar amount, e$.$g$.,$

$1,234,567.)$

Answer is complete but not entirely correct.

Should the firm conduct test$-$marketing?