Your company is planning to introduce a new online shopping service.To reduce risk, senior management propose developing the service in three stages:

a A market test for one year with a few customers at a cost of $1 million. The likelihood of success for this test is estimated to be 75%.

b A introductory period of one year, if the market test is successful. During this test the most widely ordered products will be available through the service to a wider audience. This phase of the project is estimated to cost $2.5 million with have a 50% chance of success.

c Full roll-out of the service at the end of the second year if the introductory period is successful. This phase is estimated to cost $15 million and is expected to start generating revenue only by the end of the third year.