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# Probability of high demand, NPV

1. Whyth Motors has decided to run a marketing test to determine the demand for its LEV. It figures that if the test results are positive, there is an 80% chance the demand will be high and the if the test results are negative, there is a 10% chance the demand will be high. If the chances of a positive test result for Whyth are 70%, what is the probability of high demand?

2. If high demand is worth \$30 million (NPV) and low demand worth \$-10 million, how much is the project worth? If the test results are negative, the project will not be continued, causing a loss of \$1 million.

#### Solution Preview

1) Whyth Motors has decided to run a marketing test to determine the demand for its LEV. It figures that if the test results are positive, there is an 80% chance the demand will be high and the if the test results are negative, there is a 10% chance the demand will be high. If the chances of a positive test result for Whyth are 70%, what is the probability of high demand?

Probability of ...

#### Solution Summary

Calculates Probability of high demand and NPV.

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