<div class="xblock xblock-public_view xblock-public_view-vertical" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@vertical+block@2169c1b5a430488ca8fa56e9a68159c9" data-has-score="False" data-block-type="vertical" data-init="VerticalStudentView">
<h2 class="hd hd-2 unit-title">Motivation</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d" data-has-score="False" data-block-type="video" data-init="XBlockToXModuleShim">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Motivation</h3>
<div
id="video_d51b815e8cbd4175b19275107b4ed42d"
class="video closed"
data-metadata='{"autoAdvance": false, "recordedYoutubeIsAvailable": true, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007800_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007800/MITx15.482x-V007800.m3u8"], "streams": "1.00:-GUaxshPmTE", "publishCompletionUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d/handler/publish_completion", "autohideHtml5": false, "lmsRootURL": "https://openlearninglibrary.mit.edu", "autoplay": false, "speed": null, "captionDataDir": null, "transcriptLanguages": {"en": "English"}, "saveStateUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d/handler/xmodule_handler/save_user_state", "ytTestTimeout": 1500, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d/handler/transcript/translation/__lang__", "saveStateEnabled": false, "start": 0.0, "poster": "https://mitx-edx-video-meta-storage.s3.amazonaws.com/media/video-images/b6317ec0f0a544328e54b0ee134f67f5.png?Expires=1722533052&Signature=t6dc5t7hkFMQRzxyrOMuFRlt5hY%3D&x-amz-security-token=IQoJb3JpZ2luX2VjEJH%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJGMEQCIARxEguYoK0MYvswm3PKMvyOZgvfRkMxDXMXSUy%2BOXFKAiBSI0%2B9qZHAs8p0tg9Yni4qIUBab6YH06Wqqfn87PSAlCq6BQh6EAMaDDg1OTIwNTYzNzQxMSIMWAQ0k4ssUx5xLuFXKpcFllV%2FQpdV2fCFo2bHKHFdYq%2B0U3gAi%2BWiPRirGaIUt1cCmH5p8ouNYKQ9JTLCECyXg7SGZU6%2FH6P%2FuohPZ0JctkKTg574HKVCQ4cgmknW8v9slwyr7jNAOKJ51ESudb4iUBNNIXHS3JErDC5TyJvg4yoVuqc32PKloASOk2wNe9%2FLc731wunl3PWwi04FbUGDVD5NXcxj6uIQaEY7S8qjfesxrtZcV10n%2FmmtCLiipdzJuc%2B3NE1WDPUt48SIHe%2BpDGdW6MxFHwkMPEqdfJEm5wtWYlYS72p7eQbmqkJzi7TS6RLj6VnrQdtaMQBp1lyUZjYDaG1p4N39Z%2B8mmhLtLZEwh7cRvNxzuF6SP9Nlq7W0LqBWhA5xlc5nJbuIVqIPUbiqDn8bxcr6axVwFckvv4muj5eGBJSQp3gtzEl0GMG887ZAYMIQO55bFVLqrIt9qa2BrOnGUAyWfmmsX9KzDlltft7EaXIgNs4Ub70xlxaZQT6oDc4c3AYY4mneybwlC1I4rR5ivFJgAI9uZeILXAtDhqXNHzgpHLMb%2BU8VVlUgvGYHtCUWn4yGTtJUWgB2bKVlcEooXM8Uz6gdX3dTl8XRZ81VzVCKdD7%2FDAkrrEa%2FD1I9%2FHF8DQiaxslOYpLW%2FxnCKJpMPCdsedlQUnCA8%2BTW9MGWJI%2FJ%2FsAYDgJTr0A3WRCFBXfj0JB9pztlLky3LfgdED6wpILAsNN9ZYF26LjPDyyX5Su5hIVc%2BZ5o5%2F1KbyeuF3tA6u%2Bj7WOtIYmhA997cj%2FyQoQLschuwbCfxzDCqjlxeRX5TicumTQqW4cPXbK8xXrojKH2x4EvqPQoUld0Q6z09wnISzjpH8OUctbJe%2Fk9af5SWjbmb3d54hh5e%2FZ50hi8MIj3rrUGOrIBm0xeZz%2FPv%2FZEbRlwFYRHL864430ZDm3XQ3OCk0QW6DzGArpaFwNZeemPG8jdHEN9ZpjuVOytmnNVr30oJZPdp30snWTyWveuQ6NcQkMWisEEURJ1MhOYwq8FJ0UlPTxF2fYGP%2FcNAcOx3GTB9MTHeUm%2Bx5HwxqRDBuB4MWDg9GO7PWG6X4y2OYNPrdr%2FjD71f32Fl3CVi3biBlWW5%2Bo87d%2FCJBRevITlmuV1PTD9nUgtzg%3D%3D&AWSAccessKeyId=ASIA4QDFFSURYD3NFISD", "completionEnabled": false, "ytMetadataEndpoint": "", "showCaptions": "true", "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@d51b815e8cbd4175b19275107b4ed42d/handler/transcript/available_translations", "savedVideoPosition": 0.0, "generalSpeed": 1.0, "transcriptLanguage": "en", "duration": 120.5, "completionPercentage": 0.95, "prioritizeHls": false, "ytApiUrl": "https://www.youtube.com/iframe_api", "end": 0.0}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="d51b815e8cbd4175b19275107b4ed42d"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@vertical+block@2a09f3acce3d473faad25d3b267fb3d9" data-has-score="False" data-block-type="vertical" data-init="VerticalStudentView">
<h2 class="hd hd-2 unit-title">Real Options</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781" data-has-score="False" data-block-type="video" data-init="XBlockToXModuleShim">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Real Options</h3>
<div
id="video_79fbcd780f53426694370cecc8300781"
class="video closed"
data-metadata='{"autoAdvance": false, "recordedYoutubeIsAvailable": true, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008100_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008100/MITx15.482x-V008100.m3u8"], "streams": "1.00:c0GmZhCbVxc", "publishCompletionUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781/handler/publish_completion", "autohideHtml5": false, "lmsRootURL": "https://openlearninglibrary.mit.edu", "autoplay": false, "speed": null, "captionDataDir": null, "transcriptLanguages": {"en": "English"}, "saveStateUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781/handler/xmodule_handler/save_user_state", "ytTestTimeout": 1500, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781/handler/transcript/translation/__lang__", "saveStateEnabled": false, "start": 0.0, "poster": null, "completionEnabled": false, "ytMetadataEndpoint": "", "showCaptions": "true", "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@79fbcd780f53426694370cecc8300781/handler/transcript/available_translations", "savedVideoPosition": 0.0, "generalSpeed": 1.0, "transcriptLanguage": "en", "duration": 590.67, "completionPercentage": 0.95, "prioritizeHls": false, "ytApiUrl": "https://www.youtube.com/iframe_api", "end": 0.0}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="79fbcd780f53426694370cecc8300781"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@vertical+block@2a78de8c0987484f8f99017972d650e9" data-has-score="False" data-block-type="vertical" data-init="VerticalStudentView">
<h2 class="hd hd-2 unit-title">Decision Trees</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928" data-has-score="False" data-block-type="video" data-init="XBlockToXModuleShim">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Decision Trees</h3>
<div
id="video_1ab8cdabfd6d49129d86ccaf5136c928"
class="video closed"
data-metadata='{"autoAdvance": false, "recordedYoutubeIsAvailable": true, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007700_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007700/MITx15.482x-V007700.m3u8"], "streams": "1.00:oFNnYWRvOwk", "publishCompletionUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928/handler/publish_completion", "autohideHtml5": false, "lmsRootURL": "https://openlearninglibrary.mit.edu", "autoplay": false, "speed": null, "captionDataDir": null, "transcriptLanguages": {"en": "English"}, "saveStateUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928/handler/xmodule_handler/save_user_state", "ytTestTimeout": 1500, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928/handler/transcript/translation/__lang__", "saveStateEnabled": false, "start": 0.0, "poster": null, "completionEnabled": false, "ytMetadataEndpoint": "", "showCaptions": "true", "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@video+block@1ab8cdabfd6d49129d86ccaf5136c928/handler/transcript/available_translations", "savedVideoPosition": 0.0, "generalSpeed": 1.0, "transcriptLanguage": "en", "duration": 677.79, "completionPercentage": 0.95, "prioritizeHls": false, "ytApiUrl": "https://www.youtube.com/iframe_api", "end": 0.0}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="1ab8cdabfd6d49129d86ccaf5136c928"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@vertical+block@9853504db01b49da9f3847efc819054d" data-has-score="False" data-block-type="vertical" data-init="VerticalStudentView">
<h2 class="hd hd-2 unit-title">Exercise: Decision Trees</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db">
<div class="xblock xblock-public_view xblock-public_view-problem xmodule_display xmodule_ProblemBlock" data-graded="False" data-runtime-version="1" data-request-token="2b57cb64502a11ef9a0c02a80dc587bd" data-runtime-class="LmsRuntime" data-course-id="course-v1:MITx+15.482x+1T2019" data-usage-id="block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db" data-has-score="True" data-block-type="problem" data-init="XBlockToXModuleShim">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Problem"}
</script>
<div id="problem_6915c075d5df4eceb3a7b40e2b13e0db" class="problems-wrapper" role="group"
aria-labelledby="6915c075d5df4eceb3a7b40e2b13e0db-problem-title"
data-problem-id="block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db" data-url="/courses/course-v1:MITx+15.482x+1T2019/xblock/block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db/handler/xmodule_handler"
data-problem-score="0"
data-problem-total-possible="1"
data-attempts-used="0"
data-content="
<h3 class="hd hd-3 problem-header" id="6915c075d5df4eceb3a7b40e2b13e0db-problem-title" aria-describedby="block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db-problem-progress" tabindex="-1">
Exercise: Decision Trees
</h3>
<div class="problem-progress" id="block-v1:MITx+15.482x+1T2019+type@problem+block@6915c075d5df4eceb3a7b40e2b13e0db-problem-progress"></div>
<div class="problem">
<div>
<span>
<p>
In practice, decision trees are used more frequently than option pricing theory to value biomedical projects. Therefore, let's revisit a previous exercise, but this time in the context of decision trees.</p>
<p>Imagine you are the CFO of ABC Pharmaceuticals, and you have just financed a Phase 3 clinical trial for a new migraine medication at a cost of $200 million. If the trial is successful, the market launch for the new therapy would cost $100 million, and would occur at the end of the clinical trial in 3 years. In addition, the present value of future commercialization profits at the moment of product launch is expected to be $650 million. The annualized cost of capital for the Phase 3 stage of the project is 12% per year. If the probability of success of the trial is 60%, then what is the project's rNPV? (Note: Your answer should be expressed in units of millions of dollars.)</p>
<p>
<p style="display:inline">$</p>
<div class="inline" tabindex="-1" aria-label="Question 1" role="group"><div id="inputtype_6915c075d5df4eceb3a7b40e2b13e0db_2_1" class=" capa_inputtype inline textline">
<div class="unanswered inline">
<input type="text" name="input_6915c075d5df4eceb3a7b40e2b13e0db_2_1" id="input_6915c075d5df4eceb3a7b40e2b13e0db_2_1" aria-describedby="status_6915c075d5df4eceb3a7b40e2b13e0db_2_1" value=""/>
<span class="trailing_text" id="trailing_text_6915c075d5df4eceb3a7b40e2b13e0db_2_1"/>
<span class="status unanswered" id="status_6915c075d5df4eceb3a7b40e2b13e0db_2_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
<p id="answer_6915c075d5df4eceb3a7b40e2b13e0db_2_1" class="answer"/>
</div>
</div></div>
<p style="display:inline">million</p>
</p>
<p>
<div class="solution-span">
<span id="solution_6915c075d5df4eceb3a7b40e2b13e0db_solution_1"/>
</div></p>
</span>
</div>
<div class="action">
<input type="hidden" name="problem_id" value="Exercise: Decision Trees" />
<div class="submit-attempt-container">
<button type="button" class="submit btn-brand" data-submitting="Submitting" data-value="Submit" data-should-enable-submit-button="True" aria-describedby="submission_feedback_6915c075d5df4eceb3a7b40e2b13e0db" >
<span class="submit-label">Submit</span>
</button>
<div class="submission-feedback" id="submission_feedback_6915c075d5df4eceb3a7b40e2b13e0db">
<span class="sr">Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button.</span>
</div>
</div>
<div class="problem-action-buttons-wrapper">
</div>
</div>
<div class="notification warning notification-gentle-alert
is-hidden"
tabindex="-1">
<span class="icon fa fa-exclamation-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="6915c075d5df4eceb3a7b40e2b13e0db-problem-title">
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification warning notification-save
is-hidden"
tabindex="-1">
<span class="icon fa fa-save" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="6915c075d5df4eceb3a7b40e2b13e0db-problem-title">None
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification general notification-show-answer
is-hidden"
tabindex="-1">
<span class="icon fa fa-info-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="6915c075d5df4eceb3a7b40e2b13e0db-problem-title">Answers are displayed within the problem
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
</div>
"
data-graded="False">
<p class="loading-spinner">
<i class="fa fa-spinner fa-pulse fa-2x fa-fw"></i>
<span class="sr">Loading…</span>
</p>
</div>
</div>
</div>
</div>
</div>
© All Rights Reserved