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introduction the management felt that the product had 50% chance of being extremely successful, 30% chance of being successful and 20% chance of failing. If
introduction the management felt that the product had 50% chance of being extremely successful, 30% chance of being successful and 20% chance of failing. If extremely successful the product would generate $12 million in profits over the planning period, if successful $8 million and if it failed the result would be loss of $7 million. If Cell does not introduce this new line, they will stay with the current product and realize a profit of $5 million based on the company's projections. A. What is the expected value to Cell Computer Company of introducing the new line of personal computers? B. What is the expected value under certainty (when there is perfect information)? C. In order to get perfect information, the company can undertake marketing research. The research director was asked what the total cost of the research would be. He stated that after including all the expenses of the test market, salaries, wages, outside consulting fees etc. the total cost would be $2.5 million. Should the company do the research study proposed by the director
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