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:

Arbitration

A form of alternative dispute resolution where a neutral third party makes a decision on a dispute outside of the court system.

Judicial Actions

involves legal proceedings or activities carried out by courts and judges, encompassing the enforcement, interpretation, and application of laws.

Arbitration

A method of dispute resolution outside the courts, where a neutral third party makes a binding decision.

Contract Dispute

A disagreement between parties regarding the interpretation, fulfillment, or enforcement of a contract.