Consulting company performs basic market analysis

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A consulting company performs a “basic” market analysis for a client. It incurs costs of $80,000 in performing the analysis and plans to sell the report to the client for $240,000. After reviewing the initial report, the client asks the firm if it is willing to do a more extensive report. The client offers to pay $400,000 for a more extensive report. If the more extensive report is done, the client will NOT pay the $240,000. If the consulting firm estimates it will require $170,000 in additional expenses to complete the more extensive report, should it agree to do the more extensive report? Why or Why not? Be specific in your response.

Reference no: EM131264412

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