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The manager of a growing firm is considering the launch of a new product. If the product goes directly to the market, there is a
The manager of a growing firm is considering the launch of a new product. If the product goes directly to the market, there is a 60% chance of success. However, the manager can hire a consulting company to study the market and the characteristics of the peer Products. Hiring the consulting will increase the product's chance of success to 70%. Half of the Consulting cost will be paid imrediately, the remaining half will be paid in the future at time =1. If the firm successfully launches the product, the pay 088 will be 1.87 million. If the product is a failure, the NPV is zero. The rate of return on the market is s0%. a) calculate the NPV of going directly to the marked b calculate the NPV of hiring the consulting compay
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