Use the Information Below to Answer the Following Questions)

question 38

Multiple Choice

Use the information below to answer the following questions) . Below is a decision tree illustrating the R&D process for a new drug. Let us assume that if market is large, payoff is lognormally distributed with a mean of $4,900 million and a standard deviation of $1,000 million; if market is medium, payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if market is small, payoff is normally distributed with a mean of $1,800 million and standard deviation of
$200 million. Let us also assume that the cost of clinical trials is uncertain and estimates are modeled with a triangular distribution with a minimum of -$700 million, a most likely value of -
$550 million, and a maximum of -$500 million. Use 10,000 trials and a random seed of 1.
-What is the value of mode obtained from the simulation results? [Hint: Choose the approximate value.]

• A) $ 119.0
• B) $ 116.1
• C) $ 105.7
• D) $ 94.1

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Definitions:

Peer Status

The level of social acceptance or respect given to an individual by their peers.

Cultural Standards

Values, beliefs, and norms shared by a group of people, which dictate the acceptable behavior, language, and practices within that culture.

Developmental Processes

The series of changes and growth that occur throughout the life cycle of living organisms, especially humans.

Middle Childhood

A developmental stage that occurs approximately between the ages of 6 and 12 years, characterized by significant growth in cognitive, emotional, and social abilities.