Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

A pharmaceutical company is in the process of developing a new drug. The development is planned in two stages. The first stage costs one million dollars, and the second stage costs two million dollars. If the development is successful it will result in revenues of five million dollars. All dollars are in present value, and discounting is not necessary. The 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. The company has the option not to develop the new drug.

Draw 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.:- M928384

Have any Question? 


Related Questions in Business Management

Outpatient treatment vs inpatient treatment an honest

Outpatient Treatment vs. Inpatient Treatment: An Honest Comparison 4 page paper plus 14 slide powerpoint. https://www.youtube.com/watch?v=q2Llj2Om6QM Prepare and submit a paper responding to the following items: Use the ...

As a manager how important do you think it would be to

As a manager, how important do you think it would be to share the financial condition of your organization to your employees? What benefits and/ or problems do you see by doing so? This has to be two or more pages

Explore existing drone technology focus on the following

Explore existing drone technology. Focus on the following question How do drones help our planet? Explain briefly?

International business assignmentelementsselect a unique

International Business Assignment Elements: Select a unique country; first come first served; use a variety of website links including www.cia.gov To find answers to the following questions; prepare a written report (3 p ...

Read the synopsis of the scenario you viewed at the

Read the synopsis of the scenario you viewed at the beginning of this module: The two companies will need to merge their business information systems or find a new one that will work in a distributed organizational envir ...

Describe industry standards for protecting data integrity

Describe industry standards for protecting data integrity and for mitigating risks that safeguard health information systems.

Data communications and project planningmust be new and

Data Communications and Project Planning MUST BE NEW AND ORIGINAL WORK NOT GIVEN TO OTHER STUDENTS. Write in a clear, concise, and organized manner; demonstrate ethical scholarship in the accurate representation and attr ...

Createnbspa 2- to 3-pagenbspcreatenbspa document of 10

Create  a 2- to 3-page  create  a document of 10 Frequently Asked Questions (FAQ) that you would expect to receive from users of a network, with a well-crafted response or answer. These FAQs should be related to what eac ...

Object-orientated analysis and designhow do object-oriented

Object-Orientated Analysis and Design: How do object-oriented analysis and design (OOAD) methodologies compare to the traditional structured analysis and design methodologies covered earlier in the book? Define UML and d ...

Assignment 1-2 page paper manging conflict articlethis

Assignment: 1-2 Page Paper Manging Conflict Article THIS NEEDS TO BE COMPLETELY FREE OF PLAGERISM, APA FORMATING WITH INTEXT CITIATIONS AND REFERENCES.THIS PAPER MUST BE NEWLY WRITTEN AS I HAVE HAD PAPERS SUBMITTED JUST ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen