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 $3 million. If it would cost $1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete development of the new product and bring it to market?

Answer 1

This implies the most that the firm doesn't need to pay to finish the undertaking to $1m+$2m=$3m.

Step-by-step explanation:

The choice for this case will be subject to whether the choice will bring about a financial benefit or a monetary misfortune. Choices bringing about increasingly financial benefit or less monetary misfortune is favoured.

Economic benefit is complete income short certain and unequivocal expenses. It would be better for the firm to feel free to finish the new item development. The most that the firm should pay to finish the undertaking would be the sum that would bring about zero financial benefit.