Consider the Following Project Data: (1) a $500 Feasibility Study

question 65

Multiple Choice

Consider the following project data: (1) A $500 feasibility study will be conducted at t = 0.
(2) If the study indicates potential, the firm will spend $1,000 at t = 1 to build a prototype. The best estimate now is that there is an 80 percent chance that the study will indicate potential, and a 20 percent chance that it will not.
(3) If reaction to the prototype is good, the firm will spend $10,000 to build a production plant at t = 2. The best estimate now is that there is a 60 percent chance that the reaction to the prototype will be good, and a 40 percent chance that it will be poor.
(4) If the plant is built, there is a 50 percent chance of a t = 3 cash inflow of $16,000 and a 50 percent chance of a $13,000 cash inflow.

• A) -$35
• B) -$12
• C) $ 0
• D) $12
• E) $35

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Definitions:

Conforming

Adjusting one's behavior or thinking to align with group norms or expectations.

Team Development

The process of enhancing the capability and functionality of a team through various strategies and practices aimed at improving collaboration and performance.

Dysfunctional Norms

Group norms that hinder or have a negative impact on the individual or group performance, cohesiveness, or effectiveness.

Sequential Interdependence

A work process in which the output of one task becomes the input for the next, necessitating a particular order of operations.