Abandonment in the previous problem, suppose you think it is likely that expected sales will be revised
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Abandonment in the previous problem, suppose you think it is likely that expected sales will be revised upward to 9.000 units if the first year is a success and revised downward to 4.000 units if the first year is not a success.
a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering.
b. What is the value of the option to abandon?
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a If the project is a success present value of the future cash flows will be PV future CFs 659000PVI...View the full answer
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
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