Essay
A firm is considering the development of a new technology with a declining probability of success in each research stage.The firm's researchers have estimated the probabilities at 0.35,0.25,0.15,0.07,and 0.01 for the various stages.The profit the firm would receive for successful development is $100 million,while the cost of research in each period is $10 million.How many investment stages should the firm undertake before abandoning the project?
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