## Riya Agarwal is teaching live on Unacademy Plus

CAT DILR MOCKTEST 1

ABOUT ME . I hold a B.E degree in Electronics & Communication Engineering. CAT, 17: DI & LR-98.29 %ile. . Follow me on the Unacademy learning app for all conceptual courses and practice papers on DI & LR topics for CAT and other B-school entrance exams: https://unacademy.com/userli riyaagarwal .Not all are born Einstein's but trust me with hard work and dedication we can together make it possible.

SOLUTION

PROBLEM 5

DIRECTIONS FOR Q.17- Q.20 Subendu Roy was the head of a toy manufacturing company that was trying to develop a new product. Roy, along with his friend Siddhant Agrawal, assessed that such products had mixed success. Roy and Agrawal realized that if a new product was a success, it may result in sales of 100 crores but if it is unsuccessful, the sales may be only 20 crores. They further assessed that a new product was likely to be successful 50% of times. Cost of launching the new product was likely to be 50 crores. Now, Roy and Agrawal were in a quandary whether the company should go ahead and market the product. They contacted Angad Adhikary, a common friend for advice. Adhikary was of the opinion that given the risky nature of launch, it may be a better idea to test the market. Agrawal and Roy realized test marketing would cost 10 crores. Adhikary told them the previous test marketing results have been favorable 70% of times and success rate of products ly tested was 80%. Further, when test marketing results were unfavorable/the products have been successful 30% of the times.

ANSWER THE FOLLOWING: Q17. How much profit(in crores) can the company expect to earn if it launches the new product (suppose there are no additional costs)? (Non- MCQ) Q18. If Agrawal and Roy decides to launch the product despite unfavorable test marketing, how much profit can the company expect to earn? A. 10 crores B.-13.2 crores C.-36.8 crores .-16 crores Ql9. How much profit(in crores) can the company expect to make if the product is launched after favorable test marketing results.(assume there are no additional costs)? (Non- MCQ) Q20. What is the probability of product failure if Roy and Agrawal decides to test market it? A. 0.14 B.0.35 C. 0.28 D. Indeterminable

Q17. How much profit (in crores) can the company expect to earn if it launches the new product (suppose there are no additional costs)? (Non- MCQ) Solution:

DIRECTIONS FOR Q.17- Q.20 Subendu Roy was the head of a toy manufacturing company that was trying to develop a new product. Roy, along with his friend Siddhant Agrawal, assessed that such products had mixed success. Roy and Agrawal realized that if a new product was a success, it may result in sales of 100 crores but if it is unsuccessful, the sales may be only 20 crores. They further assessed that a new product was likely to be successful 50% of times. Cost of launching the new product was likely to be 50 crores Now, Roy and Agrawal were in a quandary whether the company should go ahead and market the product. They contacted Angad Adhikar, a common friend for advice. Adhikar was of the opinion that given the risky nature of launch, it may be a better idea to test the market. Agrawal and Roy realized test marketing would cost 10 crores. Adhikar told them the previous test marketing results have been favorable 70% of times and success rate of products favorably tested was 80%. Further, when test marketing results were unfavorable/the products have been successful 30% of the times.

Q17. How much profit (in crores) can the company expect to earn if it launches the new product (suppose there are no additional costs)? (Non- MCO) Solution: The cost of launching the product 50 crores The probability of the success of the product is 50%. Hence, the profits(50% of 100 + 50% of 20)-50-10 crores. Answer: 10

Q18. If Agrawal and Roy decides to launch the product despite unfavorable test marketing, how much profit can the company expect to earn? A. 10 crores B.-13.2 crores C.-36.8 crores D.-16 crores Solution: