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Dada Inc. has a one-year proprietary license to develop software essential for creation of a new generation of FastGadgets. The project's estimated cost is $55
Dada Inc. has a one-year proprietary license to develop software essential for creation of a new generation of FastGadgets. The project's estimated cost is $55 million. If consumers love the new FastGadget, Dada's revenues will skyrocket. Otherwise, if sales of FastGadgets turn out to be low, Dada will be ruined. Dada has an option similar to acall option, which enables it to minimize the risk by taking the following action: Abandon the project now because it is too risky. Undertake the project now to get ahead of the industry in creating the software. Wait for a year and then sell the license if consumers love FastGadget. Wait for a year and then undertake the project if there is a great demand for the FastGadget
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