Use the Information for the Question(s)below

question 13

Multiple Choice

Use the information for the question(s) below.
DM Skateboard company is planning to develop a new electric skateboard.In order for the project to be successful,the company must develop a new deck to accommodate a lightweight battery and a remote that is easy to operate while moving in an open environment.The company estimates the following costs,times,and probabilities of success for each component of the new skateboard: All three risks are idiosyncratic and the risk-free rate of interest is 5%.The company does not have the resources to develop all the components at the same time.Therefore,management needs to decide in what order to develop the technologies.
-What is the failure cost index of the deck technology?

• A)0.00500
• B)0.98500
• C)0.98536
• D)0.00536

---

Definitions:

Apparent Authority

The appearance or assumption of authority based on the actions or statements of the principal, leading third parties to believe that a representative has authority to act.

Bound

To be legally or morally obligated; often referring to the commitments made in a contract or agreement.

Purchased

Purchased refers to the acquisition of goods or services in exchange for money or other consideration.

Ratifying Contract

The act of formally approving an agreement to make it valid and binding, often after the fact.