Two Technologies Are Being Considered for a Rocket Motor for Space

Essay

Two technologies are being considered for a rocket motor for space tourist vehicles. Costs are estimated for development and initial production (including the plant to produce the motors). Also estimated are the demand and likely profit margins for the motors in terms of NPV. This information along with estimates of the probabilities of success of the development and launch efforts are shown below:
$$\begin{array} { c c c c c l } \text { Motor type } & \text { Development } & \text { Prob } & \text { Production } &\text{Prob}& \text { NPV } \\\text { A } & 50 & 0.70 & 20 & 0.60 & 200 \\\text { B } & 70 & 0.60 & 25 & 0.50 & 250\end{array}$$ Based on ECV, which motor project is better?