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Market Market Size (units) Monopoly Mkt Share Duopoly Mkt Share 500,000 50% Assumes monopoly pricing Assumes market sharing, competitive lower prices and MKT share for 35% both companies
New Product Launch Costs Variable Costs $ Fixed Costs $ Pricing Monopoly Duoploy Predicted Profit & Loss
$ $
100.00 75.00
Monopoly Senario Revenue $ Total Costs $ Annual Profit $ Duopoly Senario Revenue $ Total Costs $ Annual Profit $
3,000,000
Monopoly Present Value Discount Rate 10% Period (Yrs) 3 Annual Profit $ 12,500,000 Present Value $31,085,649.89 Duopoly Present Value Discount Rate 10% Period (Yrs) 3 Annual Profit $ 2,875,000 Present Value $7,149,699.47 Existing Product Present Value Discount Rate 10% Period (Yrs) 3 Annual Profit $ 3,000,000 Present Value $7,460,555.97
20% $31.09
#NAME? #NAME?
Success
30% $2.00
#NAME?
80% $7.15
#NAME? #NAME?
Failure
70% $0.00
#NAME? #NAME?
#NAME?
Retain $7.46
#NAME? #NAME?
Target Cell 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
0 7.5 7.5 7.5 7.5 10.2 13.5 16.9 20.2 23.5 26.8 30.1
0.1 7.5 7.5 7.5 7.5 9.3 12.3 15.4 18.5 21.6 24.6 27.7
0.2 7.5 7.5 7.5 7.5 8.3 11.1 14.0 16.8 19.6 22.5 25.3
0.3 7.5 7.5 7.5 7.5 7.5 10.0 12.5 15.1 17.7 20.3 22.9
Second Order Source Cell : Prob of Entry 0.4 0.5 0.6 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 8.8 7.6 7.5 11.1 9.7 8.2 13.5 11.8 10.1 15.8 13.9 12.0 18.2 16.0 13.9 20.5 18.1 15.7
Target Cell New Product Tree'!$C$20 First Order Source New Product Tree'!$G$5 Second Order Source New Product Tree'!$J$9
0.0
0 0.2 0.4 0.6 0.8 1 0
Prob of Entry
Prob of Success
Target Cell 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
0 Retain Retain Retain Retain Launch Launch Launch Launch Launch Launch Launch
0.1 Retain Retain Retain Retain Launch Launch Launch Launch Launch Launch Launch
0.2 Retain Retain Retain Retain Launch Launch Launch Launch Launch Launch Launch
0.3 Retain Retain Retain Retain Retain Launch Launch Launch Launch Launch Launch
Second Order Source Cell : Prob of Entry 0.4 0.5 0.6 Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Launch Launch Retain Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch Launch
: Prob of Entry 0.7 7.5 7.5 7.5 7.5 7.5 7.5 7.5 8.4 10.1 11.7 13.3 0.8 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 8.1 9.5 10.9 0.9 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 8.5 1 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5
New Product Tree'!$C$20 First Order Source New Product Tree'!$G$5 Second Order Source New Product Tree'!$J$9
: Prob of Entry 0.7 Retain Retain Retain Retain Retain Retain Retain Launch Launch Launch Launch 0.8 Retain Retain Retain Retain Retain Retain Retain Retain Launch Launch Launch 0.9 Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Launch 1 Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain Retain
Probability Node
4.15
Launch (3) 581,067 Failure 70% 0 2 Payout Value 7.46 Retain 7.46 7.46 Node #1 not selected as node #2 higher (3)
Terminal Value
Note all links have been removed from this decision tree
Terminal Value