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Q3. (Exercise 5.6; all table and exercise numbers are from your textbook) Suppose that the products from Exercise 5.5 have been rated further as shown
Q3. (Exercise 5.6; all table and exercise numbers are from your textbook) Suppose that the products from Exercise 5.5 have been rated further as shown in Table 5.15 TABLE 5.15 A B / C 0.9 0.8 0.7 Product Probability of technical success Probability of commercial success |Annual volume (units) 0.6 0.8 0.9 10,000 8,000 6,000 Profit contribution per $2.64 $3.91 $5.96 unit Lifetime of product (years) 10 12 Total development cost $50,000 $70,000 $100,000 Compute the expected return on investment over the lifetime of each product
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