Define the type of decision that the firm is required

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Reference no: EM133342196

Case: Jackson Pharmaceuticals plans to fund a research team in order to launch a new drug for Lyme disease and therefore the the board of directors must make a decision on whether to go ahead the investment or not. After much discussion of the alternatives, it is estimated
that the total cost of the financing will be in the region of 10 million euros, but no no guarantee from the research team that the drug, despite the investment, will be successfully developed. In particular, the scientists give a 40% chance of succeeding in to create the drug for Lyme disease. Moreover, if the drug is eventually created successfully, Jackson Pharmaceuticals will have to decide whether to produce it

itself, or whether to sell the patent rights to another company for 30 million Euros. At case Jackson produces the drug itself, and the production is positively settled and and without problems, the executives predict that the venture will generate profits of in the order of EUR 50 million over the next five (5) years. However, there is also a possibility of 30 % of production having problems, in which case the in which case the profits are expected to be in the order of EUR 10 million over the same period By
answer the following question:

Define the type of decision that the firm is required to make and in Then select the appropriate type of decision making model, documenting your answer appropriately.

Reference no: EM133342196

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