Big Big Cure presenty has a potential blockbuster drug before the Food and Drug

Question

Big Big Cure presenty has a potential blockbuster drug before the Food and Drug Administration FDA) wating for aorovalf spproved Bg Cure's blockbuster drug will produce $1 bilion in net income for Big Cune. Little Cure has ten separate, less important drugs before the FDA waiting for approval. Iif approved, each of Litle Cure's drugs would preduce $150 million in net income for Liftile Cure. The probability of the FDA approving a drug is 50% Cure and Little Cure are both pharmaceutical companies What is the expected payoft for Litle Cure's ten drugs? ??. $1 bilion OC. $150 milion O D. $750 million

Explanation / Answer

Expected payoff = Prob of payoff × Amount if successful

                            = 0.5 * 150 *10 = $750 million

Answer - D. $750 million.

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