posted by Booker Perry on .
Imagine that you manage a company that has invested $5 million in developing a new product, but has not completed development. At the last meeting, your salespeople report that the arrival of new competing products has reduced expected sales of your new product to $3 million. If it would cost $1 million to finish development and make the product, should you do so? What is the most you should pay to complete development? Why? Be sure to explain.