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The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $1.5 million. If it would cost $2 million to finish development and make the product, you    go ahead and do so. The most you should pay to complete development is million.

Question

The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $1.5 million. If it would cost $2 million to finish development and make the product, you    go ahead and do so. The most you should pay to complete development is

 

million.

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Step 1

given information is that, i have invested 5 million already and now the expected sales of new product declined to 1.5 million. this means if i go for finishing the development by investiog 2 million more, what i get is revenue of 1.5 million only against 5+ 2=7 million of investment implying economic loss of 5.5 million.

but if i w...

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