Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a

Transcendent Technologies is deciding between developing a complicated thought-activated software, or a simple voice-activated software. Since the thought-activated software is complicated, it only has a 30% chance of actually going through to a successful launch, but would generate revenues of $50million if launched. The voice-activated software is simple and hence has a 80% chance of being launched but only generates a revenue of $10million. The complicated technology costs 10million, whereas the simple technology costs 2million.

If the simplified version costs $2 million and its probability of success is 75%, whereas the cost of the complicated version is $10million, what is the minimum probability of success for the complicated version that would make the firm indifferent between the two software?

A. 0.3

B. 0.32

C. 0.33

D. 0.31

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Microeconomics

Authors: N Gregory Mankiw

9th Edition

035713348X, 9780357133484

More Books

Students also viewed these Economics questions

Question

=+What is the VIF for Age?

Answered: 1 week ago

Question

An operating budget is used to communicate plans to:

Answered: 1 week ago

Question

The quality of the proposed ideas

Answered: 1 week ago

Question

The number of new ideas that emerge

Answered: 1 week ago