A manufacturer considering the manufacture of a new and bett

A manufacturer considering the manufacture of a new and better mousetrap. She probability that the new mousetrap is successful is 3/4. If it is successful it would generate profits of $ 120.000. The development costs for the mousetrap are $98,000. the manufacturer proceed with plans for the new mousetrap? Why or why not?

Solution

Since the Probability of success is high (0.75), it is recomended that the manufacturer should proceed with the plans for the new mousetrap