Question
Kobe Ball Company is deciding between developing two different high-tech balls. The first is a football with a sensor sensor football to determine when it
Kobe Ball Company is deciding between developing two different high-tech balls. The first is a football with a sensor "sensor football" to determine when it crosses the goal line. The NFL and college football teams would use it to help alleviate time-consuming video reviews during goal-line situations. The second is a football "stats football" that tells you the speed, length, and spin rate of throws. The "sensor ball" for the NFL and college requires complicated technology. In addition, it needs an agreement with stadiums to put underground sensor strips on the goal line. Internal analysts predict a 50% success rate, 10 million dollars to develop, but with the potential to generate 100 million dollars in revenue. The "stats ball" has a 90% success rate, and 5 million dollars to develop, with the potential to generate 75 million dollars in revenue. (20 points).
a. What is the expected value of the "sensor ball."
b. What is the expected value of the "stats ball."
c. At what percentage success rate would the "sensor ball" lead to the higher expected value compared to the stats ball?
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