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 $60$ percent chance of success. However, the firm can

conduct customer segment research, which will take a year and cost $$1\mathrm{.}21$ million. By

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

and will increase the probability of success to $75$ percent. If successful, the baby powder

will bring a present value profit $($at time of initial selling$)$ of $$19\mathrm{.}1$ million. If unsuccessful,

the present value payoff is only $$6\mathrm{.}1$ million. The appropriate discount rate is $14$ percent.

Calculate the NPV for the firm if it goes to market immediately and if it conducts

customer segment research. $($Do not round intermediate 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 immediately