. Revlon is evaluating two projects for developing new products, Attractiva (A) and Beautina (B). He company expects the probability of successful development of A to be 80% and its commercial success to be 90%; its annual sales are estimated to be 1 million bottles for the next three years. Each bottle contains two ounces of cream. The produce one pound of cream, the cost of herbs and other raw material is $9.60. "A" would be sold at $4 per bottle. The cost of developing the process would be $500,000 and the machinery needed will cost $400,000. Four highly skilled operators at $20 per hour are needed to operate the equipment.
For B, the probability of developing successfully is 95% as the company is experienced in the area; market success would be 60% and annual sales are estimated around 600,000 bottles per year for the next years. Each bottle contains four ounces of cream. Raw materials needed would cost $4.40 per pound and it would be sold at $2.00 per bottle. Cost of developing process and equipment are $50,000 and $200,000 respectively. Two operators at $20 per hour are needed. using the PVI formula, recommend which project should Revlon choose?"