ring a new line of molded foam sports novelty items to be marketed to a uct placed with the retailer, NN must first produce prototype products to pitch to the retailer's sports buyer. The prototypes would cost $10,000 at t-0 NN's development team believes that there is a 70% chance that the buyer will approve of the pro company would need to spend $75,000 at t-1 to make production molds. If the buyer rejecs totypes a nd the project would be abandoned. Once the produc well, N production sell well in the test stores tion molds are in place, the buyer will place the products in a few test stores. If the product sells N will invest another $100,000 at t-2 to ramp up production capacity for a national rollout. If not, the molds will be sold at t-2 for $25,000. NN believes that there is a 60% chance that the products will Once the national rollout occurs, there Novelties will have a cash inflow of $900,000 at t-3. If the products are less popular, the cash inflow is expected is a 45% chance that the foam novelty products are a hit and Noah's to be $200,000. NN uses a WACC of 15% for all projects. Should the company spend the S 10,000 to create the prototypes? (10 points)