SCENERIO BASED

We'll need to invest about a $150,000, right up front, to get the lab ready and make the switch to working with a new virus. Also, because of the health risks involved, I recommend investing in additional insurance: probably another $50,000, just to be safe. And we'll need to suspend other profitable projects, which means losing out on about $125,000."

What do potential earning looks like : Jessica says, "I've done some rough calculations. Based on our experience with HIV, we know we can develop rapid-test kits relatively cheaply. In the short run, we could make 100,000 of them and sell them for $10 each. The costs to manufacture the kids is about $4 each, for a profit of $6 per kit."

"Sounds about right," says Claire. "That is, IF we succeed in developing a test. And we probably will. But it's only, let's say, 75% likely.

what's the expected value of the project?