QUESTION 6

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2million.

Of the two software options, complicated software, now costing $15.5 million with a probability of success at 50%, and the simplified software, with a probability of a success at 65%, which one would the firm choose to develop if it can develop only one?

1. a.The simple voice-activated software
2. b.The complicated thought-activated software
3. c.Neither of the software
4. d.Need more information

QUESTION 7

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2million.

If the firm learns that the complicated technology can be made more stable with a few tweaks increasing the price to 15.5 million and increasing the probability of a launch to 50%. Given the new costs and probabilities of launch for the complicated software, which technology would the firm rather invest in now?

1. a.The simple voice-activated software
2. b.The complicated thought-activated software
3. c.Neither of the software
4. d.Need more information

QUESTION 8

Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $40, $30, $20, and $10 respectively. The expected value is:

a.$22

b.$28

c.$24

d.$26

QUESTION 9

Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $10, $20, $30, and $40 respectively. The expected value is:

1. a.$22
2. b.$24
3. c.$26
4. d.$28

QUESTION 10

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2million.

Launching the complicated version would be a mistake for probabilities less than ___?

1. a.0.2
2. b.0.30
3. c.0.28
4. d.0.32

QUESTION 20

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2million.

What is the expected revenue from developing the complicated software?

1. a.$50million
2. b.$20million
3. c.$10million
4. d.$15million