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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) 0.33 b) 0.3 c) 0.31 d) 0.32
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