You Are Considering Making a "Hillary" Action Figure to Capitalize

question 50

Multiple Choice

You are considering making a "Hillary" action figure to capitalize on popular political fever.Production will cost $5 million.If political fever strikes,you will sell action figures worth $20 million (in present value (PV) ) .If voters do not catch the political fever,you will only sell action figures worth $2 million (in PV) as only loyal Democrats will buy.Each possibility has a 50% chance.However,before production begins,you can conduct a marketing survey to determine which scenario will happen.The survey costs $1 million.Is it worth conducting the survey? Why?

• A)Do not conduct the survey as the NPV without a survey = +$6 million.
• B)Conduct the survey as the NPV with a survey = $6.5 million.
• C)Do not conduct the survey as the NPV with a survey = $5 million.
• D)Do not conduct the survey as the NPV with a survey = $4 million

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Definitions:

Hypothetical

Pertaining to situations, conditions, or concepts that are possible or imagined rather than real or actual.

Concrete Object

An object that exists in physical form and can be perceived by the senses.

Emotional Intelligence

The ability to recognize, understand, and manage one's own emotions and the emotions of others.

Exam Time

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