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Should the company purchase the patent

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Problem 1: The production analyst of Unilever is faced with deciding whether to purchase a patent to develop a new product or not. If the company purchases the patent, it should develop the product. The Selling price of the patent is ?75,000. There are two ways of developing the product: The electronic system and the manual. It costs ?60,000 to use the electronic system, and ?40,000 to use the manual. The probability of success in the electronic system is 65% and that in the manual system is 75%. If the product is successfully developed, it will give an income of ?800,000. Should the company purchase the patent?

Reference no: EM132774445

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