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Purple Turtle Group is planning to add a new product line to make iwidgets. However, Purple Turtle Groups considering the possibility of abandoning the project

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Purple Turtle Group is planning to add a new product line to make iwidgets. However, Purple Turtle Groups considering the possibility of abandoning the project if the demand for the new product is low. In the following decision tree table, (1), (2) and (3) represent decision points, also known as decision nodes or stages. The dollar value to the right of each decision node represents the net cash flow at that point, and the cash flows shown under t - 3, 4, and 5 represent the cash inflows if the project is pushed on to completion If Purple Turtle Group decides to launch the new line for iWidgets at Stage (1), then it will spend $60,000 on the marketing study. If the marketing study yields positive results, then the firm will spend $200,000 on the prototype. If the prototype works well, then the firm will spend several millions more at Stage (3) to build a production plant. Suppose that as an analyst at Purple Turtle Group you have to analyze sequential decisions. By studying the following decision tree, you learn which of the following? Check all that apply. If the project is canceled after Stage (1), Purple Turtle Group's costs will be $10,269,000. There is a 5% probability that investment in a production plant will yield bad results. If the project is canceled after Stage (1), Purple Turtle Group's costs will be $260,000. If the project is canceled after Stage (1), the cost to Purple Turtle Group will be the $60,000. Note: All cash amounts in the following table are in thousands of dollars. Step 0 Step 1 1st Invest Prob 2nd Invest Step 2 Prob 3rd Invest Step 3 Inflow Step 4 Inflow Step 5 Inflow NPV ($) Joint Prob (%) NPV x Joint Prob ($) $8,237 $2,345 (2) 55% (2) 35% (2) 5% $20,065 $7,800 95% -$200 -$10,269 -$10,000 Stop $0 (3) $4,761 (3) $1,900 (3) $0 $0 (1) -$60 $0 5% Stop $0 $0 Expected NPV = Based on your calculations, in case Purple Turtle Group abandons the new project right after the marketing study, the loss is Complete the decision tree table by calculating the net present values (NPV) and joint probabilities, as well as products of joint probabilities and NPVs for each decision branch. Assume that the weighted average cost of capital (WACC) is 9% for all decision branches. Hint: Use ether a spreadsheet program's functions or a financial calculator for this task. Round the NPs to the nearest dollar and remember to enter the minus sign if a value is negative

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