Supplementary Exercises Change font size 19.33 In the book Making Hard Decisions: An Introduction to Decision Anahais, Robert T. Clemen presents a decision tree for a research and development decision (note that payoffs are given in millions of dollars, which is denoted by M). Based on this decision tree (shown in ( Figure 19.8). answer the following: . Should development of the research project be continued or stopped? Justify your answer by using relevant calculations, and explain your reasoning. b If development is continued and if a patent is awarded, should the new technology be licensed, or should the company develop production and marketing to sell the product directly? Justify your answer by using relevant calculations and explain your reasoning. FIGURE 19.8 A Decision Tree for a Research and Development Decision for 4 Exercise 19.33 License $23M Patent technology awarded Continue Demand high P = 0.7 $43M development p = 0.25 Develop production and marketing to sell Demand medium $21M product directly p = 0.55 No patent -$2M Demand low P = 0.3 $3M p = 0.20 Stop development