Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

A pharmaceutical company is in process of developing new drug. Development is planned in two stages. First stage costs one million dollars, and second stage costs two million dollars. If development is successful it will result in revenues of five million dollars. All dollars are in present value, and discounting is not essential. Chance of successful development is 72%. If the development effort is a failure, there would be no revenue, and all the investment will be a loss. Company has the option not to develop the new drug.

Create a decision tree to model this problem. Solve the problem by rolling back the tree.

The company has the option of conducting a test at the end of the first phase, at a cost of $250,000. There is an 80% chance that the drug passes the test, and a 20% chance that the drug fails the test. If the drug passes the test there is a 90% chance that it will be a success and a 10% chance it will be a failure. Draw a decision tree including the test option. Solve the decision tree by rolling back the tree.

Compare the results for 1 and 2, and debate if testing improves the company's decision-making ability.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M930743

Have any Question? 


Related Questions in Business Management

Have a few questions i need help with each question needs

Have a few questions I need help with. Each question needs it's own answers. Q1. Many managers want to know what goes on behind the forecast. They may feel uncomfortable with complex statistical models with too many vari ...

With amazon being the focusnbspprepare an organizational

With Amazon being the focus  Prepare an Organizational Culture and Development Plan according to the following: Describe the basic nature of the organizational culture based on the external adaptation and internal integr ...

Can servant leadership exist without spiritual and moral

Can servant leadership exist without spiritual and moral dimensions? Explain your response.

Suppose the short run market demand and supply curves for

suppose the short run market demand and supply curves for imported rice in Solomon islands are as follows. the price are in dollars per Kg and the quantities are kilograms per day P= 16 - 0.5Qd P = 2+ 0.2Qs a. Find the e ...

Managerial economicsthis present papers goal is to give you

Managerial Economics This present paper's goal is to give you a presentation into directing an exact research and displaying the consequences of that exploration in a professionally composed paper. To complete this explo ...

You are a project manager for a new hardwaresoftware

You are a project manager for a new hardware/software project. You just received the project charter and established your scope statement. Within the scope statement, you defined some of the key components to meet the ov ...

Company preferred stock has a 5 coupon based on a par value

Company preferred stock has a 5% coupon based on a par value of $60 a share. Currently, investors require a 4% return. What is the value of the companies stock?

Httpscontentlearntodayinfoeqb404cweek050507videohtmwatch

https://content.learntoday.info/eq/b404c/week_05/05_07_video.htm Watch the above video and respond to these questions in 1-2 paragraphs: In this situation, Joan felt attacked by Chris and under minded when he went to the ...

Question 1nbspgo tonbspwwwgapminderorgworld in the graph

Question 1: Go to www.gapminder.org/world. In the graph shown for Y (vertical) axis select: "Child mortality (0-5 years dying per 1,000 born)" and for X (horizontal) axis select "time". From a list of the countries on th ...

Define foreign direct investments fdi and explain whether

Define Foreign Direct Investments (FDI) and explain whether you believe this statement is true or not. Cite your work.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate