Tribiani Manufacturing (TM) is evaluating a new product. If TM goes to market today, it will cost $15 million and the product is expected to create cash flows of $5.3 million per year for the next 5 years. Alternatively, the company could spend $1 million today for a market analysis. The analysis would take two years and result in a better estimate of the product demand. There is a 70 percent chance that the market analysis would find the product would produce cash flows of $7.1 million per year for 6 years and a 30 percent chance that the cash flows would be $3.8 million for 5 years. In 2 years, it would cost $16 million to take the product to market. The required return is 11 percent. Should TM take the product to market now or conduct the analysis?

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