A company is considering the development of a new product. The
first step would be to do a feasibility study. If the outcome of
the feasibility study is favorable, then the company would build a
prototype. The probability that the feasibility study outcome will
be favorable is estimated to be 65%. The probability that the
prototype will be successful is estimated to be 70%. If the
prototype is unsuccessful, then the company would sell it for an
unspecified amount. a. How many possible scenarios are there? (In
other words, how many possible outcomes where a NPV needs to be
calculated?) ( Hint: build a probability tree) b. What is the
probability the prototype will be built and be successful?