What would be the expected investment the company

Assignment Help Business Economics

Reference no: EM133363850

Case Study: A startup company currently has enough resources to execute only one of the two potential business projects: 1) AI Technology or 2) Quantum Technology. If the company chooses the AI project, there is a 20% chance of getting an investment of $100,000 from outside investors in year 1, and an 80% chance of getting no investment from the investors. If the AI project already receives an investment in year 1, there will be no additional investment available in year 2. However, if the AI project gets no investment in year 1, the company believes that it has a 50% chance of getting an investment of $100,000 from the investors in year 2, and a 50% chance of getting no investment again. If the company chooses the Quantum project, there is a 50% chance of getting an investment of $50,000 from outside investors in year 1, and a 50% chance of getting no investment from the investors. If the Quantum project receives an investment in year 1, there is a 40% chance of getting another investment of $50,000 and a 60% chance of getting nothing additional from the investors in year 2. However, if the Quantum project gets no investment in year 1, the company estimates that it has a 60% chance of getting an investment of $50,000 and a 40% chance of getting no investment again. For both the AI and Quantum projects, no further investment will be available beyond year 2.

QUESTION: If the chance for the Quantum project to receive an investment of $50,000 in year 1 increases from 50% to 60% and the chance of not getting investment in year 1 is 40%, everything else remains the same as before, what would be the expected investment (in $) the company can get from choosing the better project?

Reference no: EM133363850

Questions Cloud

What are the different phases of business cycle : What are the different phases of business cycle? Explain any one phase and discuss what happen to GDP, unemployment and Inflation rate during that phase.

Design an image or flyer for your product or service : Design an image or flyer for your product or service. After creating the flyerfimage of your product, use the Internet and online sources to answer the prompts

How do your results differ from those just for nj : Now run a regression of changes in employment and wages just for PA using this new variable for low paying restaurants in PA. How do your results differ from th

How would this affect the market : How would this affect the market - through labor supply or demand? :11 What is the new market wage that veterans earn':I How much of the subsidy goes

What would be the expected investment the company : what would be the expected investment (in $) the company can get from choosing the better project?

What should the government of the country specializing : Which country has comparative advantage in which product in this example? How do you know this? What should the government of the country specializing

What does the term ideal employee mean : Explain, using examples from the text and case, two things a company can do to ensure there is a good fit between the person and the job before the person

Managing foreign exchange exposure is therefore extremely : Walmart sources the products it sells from all over the world, so managing foreign exchange exposure is therefore extremely important for the company.

What is the monopolist profit-maximizing price : Consider a pharmaceutical company considering research and development of a new drug. They estimate that demand for this new, innovative product

User Account

All Pages