Reference no: EM133047575

A company is deciding whether to develop and launch a new product. Research and development costs are expected to be $70,000 and there is a 10% chance that the product launch will be successful, and a 90% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as follows, depending on whether the product's popularity is high, medium or low:

High: 0.6 $450,000
Medium: 0.3 $350,000
Low: 0.1 $300,000

If it is a failure, there is a 0.9 probability that the research and development work can be sold for $20,000 and a 0.1 probability that it will be worth nothing at all.

The following is a partially completed decision tree for your reference.

Correct your answer to 1-decimal place; no need to write down the $ sign and thousand separator in your answer; for negative numbers, you must indicate it by a - sign

Find out the payoffs of E to I:

Payoff E = 
Payoff F = 
Payoff G = 
Payoff H = 
Payoff I =

Calculate the expected monetary values of B to D:

EMV of B = 
EMV of C = 
EMV of D =

How much is the company going to earn (or lose) if it chooses to develop and launch the product, turns out to be successful and the product's popularity is low?

Should the company develop and launch the product? (answer either yes or no)?

When you answer please look at the numbers as previous answer was foll on mistake please.