B&B has a new baby powder ready to market. If the firm goes directly to the market with

the product, there is only a $65$ percent chance of success. However, the firm can

conduct customer segment research, which will take a year and cost $$1\mathrm{.}16$ million. By

going through research, the company will be able to better target potentlal customers

and will Increase the probability of success to $80$ percent. If successful, the baby powder

will bring a present value profit $($at time of Initial selling$)$ of $$18\mathrm{.}6$ million. If unsuccessful,

the present value payoff is only $$5\mathrm{.}6$ million. The approprlate discount rate is $13$ percent.

Calculate the NPV for the firm If It goes to market Immedlately and if It conducts

customer segment research. $($Do not round Intermedlate calculations and enter your

answers in dollars, not millions of dollars, rounded to $2$ decimal places, e$.$g$.,$

$1,234,567\mathrm{.}89.)$

Should the firm conduct customer segment research or go to the market Immediately?

Conduct research

Market Immedlately