Project Delay Prescott Labs is considering developing a ...

[WWatsford]

Project Delay Prescott Labs is considering developing a defibrillator product. You know that will require extensive testing and possible modification before it can be launched. Still, you know that even if it is launched two years from now, the present value of sales over the expected 10 year product lifecycle will cover these costs. But now the boys down at the lab tell you that it may not launch for three years. How does this affect your assessment of going ahead with funding the product?

Question 2

If Bratty Brenda decides to hit Tattling Tina, what would Tattling Tina's best response be
 a. Tell
 b. Not tell
  c. Run
 d. Hide

[mochi09]

Answer to Question 1

The delay probably implies additional costs. Even if the delay does not affect development costs, it does push the benefits further into the future. The present value of the benefits falls as each year's income gets discounted more. Both of these effects will tend to reduce the net present value of the project, making it less likely to be profitable.

Answer to Question 2

b