Question
1. The price of a unit to be manufactured can follow one of three poten- tial paths with equal probability: Path Period 0 Period 1
1. The price of a unit to be manufactured can follow one of three poten- tial paths with equal probability:
| Path | Period 0 | Period 1 | Period 2 |
| Path A | $35 | $40 | $45 |
| Path B | $35 | $40 | $40 |
| Path C | $35 | $35 | $35 |
| Path D | $35 | $30 | $25 |
Suppose that after Period 1 the price is $35.00 or $30.00, then what is the NPV of investing the second half of the $12,800.00?
(200 units each year for period 1/2)
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Public Finance And Public Policy
Authors: Jonathan Gruber
7th Edition
1319281109, 9781319281106
