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*** The expected ROI(X) for product X can be found by finding i that makes NPV(X) = 0. NPV(X) = TDC (pT *pC*annual volume *
*** The expected ROI(X) for product X can be found by finding i that makes NPV(X) = 0. NPV(X) = TDC (pT *pC*annual volume * profit)(P/A, i, n) = 0
B 0.9 0.8 Product Probability of technical success Probability of commercial success Annual volume (units) Profit contribution per unit 0.6 0.8 0.9 10,000 8,000 6,000 $2.64 $3.91 $5.96 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 productStep by Step Solution
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