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What is the marginal benefit of completing the app

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Question - Jessica is the CEO of a software company. The firm has invested $4 million in developing a new app, but the development is not done. The firm will require $2 million to complete the development.

The sales team for the company has just finished their market study and has discovered that competition from other firms has reduced expected sales to $3 million.

a. What is the sunk cost in this example?

b. What is the marginal benefit of completing the APP?

c. What is the marginal cost of completing the APP?

d. Now assume that the firm can release the APP 'as is' (meaning they don't have to invest any more money into it) but will only receive $2 million in revenue. Or they can choose to complete the project and get the $3 million in revenue but it will cost them the $2 million discussed before in the example. Should the company release the APP 'as is' or 'complete' the project?

Reference no: EM133147094

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