A company is considering the launch of a new product which it estimates has a 75% chance of success if no marketing is undertaken. The company believes that if it undertakes a marketing campaign costing $50,000 the probability of success of the product will increase to 90%.
If successful, the product will make a profit of $300,000, before marketing costs. However, if it is unsuccessful, the product will make a loss of $80,000 before marketing costs.
Required: Calculate whether it is worthwhile for the company to undertake the marketing campaign.
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