Asked by Matthew Smith on Mar 10, 2024

Verified

# Of the two software options,complicated software,now costing $15.5 million with a probability of success at 50%,and the simplified software,with a probability of a success at 65%,which one would the firm choose to develop if it can develop only one?

A) The simple voice-activated software

B) The complicated thought-activated software

C) Neither of the software

D) Need more information

Complicated Software

Software that has intricate and complex features, functionalities, or architectures, making it challenging to use, understand, or modify.

Simple Voice-Activated Software

Refers to software applications that respond to human voice commands, performing basic tasks or functions without the need for complex interactions.

Probability of Success

The likelihood or chance of an event happening or a goal being achieved.

- Investigate strategic maneuvers by factoring in their probable outcomes and cost considerations.

Verified Answer

CH

Cynthia HarboMar 10, 2024

Final Answer :

B

Explanation :

To determine the expected value of each option, we use the following formula:

Expected Value = Probability of Success x Revenue - Cost

For the complicated software:

Expected Value = 0.5 x $50 million - $15.5 million = $9.5 million

For the simple software:

Expected Value = 0.65 x $10 million - $2 million = $4.5 million

Therefore, the expected value of the complicated software is higher than the expected value of the simple software. Therefore, the firm should choose to develop the complicated thought-activated software.

Expected Value = Probability of Success x Revenue - Cost

For the complicated software:

Expected Value = 0.5 x $50 million - $15.5 million = $9.5 million

For the simple software:

Expected Value = 0.65 x $10 million - $2 million = $4.5 million

Therefore, the expected value of the complicated software is higher than the expected value of the simple software. Therefore, the firm should choose to develop the complicated thought-activated software.

## Learning Objectives

- Investigate strategic maneuvers by factoring in their probable outcomes and cost considerations.