The company that you manage has invested $5 million in developing a new product, but the development is not
quite finished. At a recent meeting, your salespeople report that because of increasing competition in the industry
the expected sales of your new product will be only $3 million.
(i) If it would cost $1 million more to finish the development of the product, should you go ahead and do so? Why or why not? show calculations
(ii) If it would cost $4 million more to finish the development, should you go ahead and do so? Why or why not? show calculations
(iii) What is the most or maximum additional amount that you should pay to complete development of the product?
(iv) What is the sunk cost in this case?