You Are Considering Making a "Hillary" Action Figure to Capitalize

Multiple Choice

You are considering making a "Hillary" action figure to capitalize on popular political fever. Production will cost $5 million. If political fever strikes, you will sell action figures worth $20 million (in present value [PV]) . If voters do not catch the political fever, you will only sell action figures worth $2 million (in PV) as only loyal Democrats will buy. Each possibility has a 50 percent chance. However, before production begins, you can conduct a marketing survey to determine which scenario will happen. The survey costs $1 million. Is it worth conducting the survey? Why?

A) Do not conduct the survey as the NPV without a survey = +$6 million.
B) Conduct the survey as the NPV with a survey = $6.5 million.
C) Do not conduct the survey as the NPV with a survey = $5 million.
D) Do not conduct the survey as the NPV with a survey = $4 million.