Merck KL-798 (A) Case I made a few assumptions in creating my tree based on the reading for this case. Firstly, I set the initial investment for Merck in the project to be $35 million, which consists of the $30 million licensing payment plus the $5 million cost to Merck for Phase I. Secondly, we were given that Phase I had a 60% chance of success, so I show the other 40% as losing all money invested in the project at that point. Similarly for Phase II, there is a 50% chance of losing the $40 million…
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