Tindi Inc risk Tindi Inc. manufactures various recreational products. Building on the success of stand-up paddle boards, Tindi has begun developing a variation that adds pedals to the board. A step-like motion rather than a paddle, is used to propel the board In addition to building core strength, the pedals strengthen leg muscles and provide an aerobic exercise. Faster than a paddle board, the pedal board is both fun and easy to use Tindi has completed the design phase but has run into a problem. It needs to develop a light-weight waterproof sprocket. The ones currently available are too big, heavy, or expensive. The company's engineers are confident that they can create a Working model for production in advance of the anticipated spring launch The development costs are estimated to be $100,000 Jordan Rueck, divisional manager is concerned. He must decide whether to tell the engineers to start developing the sprocket or to abandon the pedal-board project He has identified the risks associated with the project and has come to you for assistance in making his decision Two significant nvoluntary risks exist. The first is that a major competitor could reach the market first, Jordan believes the risk to be low (only 20%) but it would have a profound impact. Tindi would need to reduce its selling price by $300 per unit and sales would fall to 50% of the volume expected. The company would also incur $50,000 in marketing costs to boost the visibility of the product The second risk is the summer weather. Current long-term weather forecasts ndicate that there is a 70% chance that the summer w be hot and sunny. These are favourable conditions for a water activities. The initial plans anticipated that sales would be 600 units if the summer was hot, but only 400 units if the weather was less favourable. As noted previously, if the competition produces a similar product, anticipated sales would be cut in half Data is as follows: etition and good weather First year sales (no 600 units 1,500 Selling price (no competition) Selling price with Competition 1,200 Variable manufacturing and selling costs 800 $200,000 Costs incurred to date in development 100,000 Anticipated costs to develop waterproof sprocket Required a. Calculate the expected profits under each of the four possible outcomes provided in the case b. Prepare a risk card that describes the risk of having less favourable weather along with a major competitor entering the market c, Should Jordan proceed with the plan to develop the waterproof sprocket? Provide qualitative and quantitative reasons to support your answer using details from the case and from your analysis in parts (a) and (b) I need to provide qualitative and quantitative reasons to support your answer in part c
