Electronics manufacturer SE must decide whether or not to invest in the developm

Question

Electronics manufacturer SE must decide whether or not to invest in the development of a new type of battery. If the development succeeds, the market for the battery may be large or small. If it doesn't succeed, the development efforts may or may not generate minor innovations that would offset some of the battery's development costs. The tree below summarizes the decision. The EMV of developing the new battery is $300,000. Based on EMV, SE should develop the battery For what values of p = Prob [success] does developing the battery have a lower EMV than not developing the battery? P 25% p

Explanation / Answer

Electronics manufacturer SE must decide whether or not to invest in the development of a new type of battery. If the development succeeds, the market for the battery may be large or small. If it doesn't succeed, the development efforts may or may not generate minor innovations that would offset some of the battery's development costs. The tree below summarizes the decision.The EMV of developing the new battery is $300,000. Based on EMV, SE should develop the battery. For what values of p = Prob[success] does developing the battery have a lower EMV than not developing the battery?

Ans:P<25%(option A is correct)

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