Q2. An R&D company must decide whether to spend $2 M to continue a research project. There is a 0.7 chance that the project will succeed, and hence a patent is awarded. If the patent is awarded the company can either license the patent for $24M or invest an additional $ 10M to create a production and marketing system to sell the product directly. If the company chooses the later, the demand could either be high, medium, or low with the respective probabilities and returns for each case; P-25, Return=$65M, P=0.55, Return=$37M, and P=0.2, Return=$15 (7 marks) a. Draw the respective Decision tree that represents the problem b. Using the EMV approach, which option should be selected? c. Draw the risk profile for each option and assess revenue likelihoods, which option is the best option according to your risk profile? d. Draw the cumulative risk profile and assess dominance? licence 22M Q2. An R&D company must decide whether to spend $2 M to continue a research project. There is a 0.7 chance that the project will succeed, and hence a patent is awarded. If the patent is awarded the company can either license the patent for $24M or invest an additional $ 10M to create a production and marketing system to sell the product directly. If the company chooses the later, the demand could either be high, medium, or low with the respective probabilities and returns for each case; P-25, Return=$65M, P=0.55, Return=$37M, and P=0.2, Return=$15 (7 marks) a. Draw the respective Decision tree that represents the problem b. Using the EMV approach, which option should be selected? c. Draw the risk profile for each option and assess revenue likelihoods, which option is the best option according to your risk profile? d. Draw the cumulative risk profile and assess dominance? licence 22M