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3. The XYZ firm can invest in a new DRAM chip factory for $ 425 million. The factory, which must be invested in today, has
3. The XYZ firm can invest in a new DRAM chip factory for $ 425 million. The factory, which must be invested in today, has cash flows two years from now that depend on the state of the economy. The cash flows when the factory is running at full capacity are described by the following tree diagram: Year 0 Year 1 Year 2 $ 1 billion if 2 good years GB 200 million if 1 good and 1 bad year BG $500 million if 2 bad years 3. The XYZ firm can invest in a new DRAM chip factory for $ 425 million. The factory, which must be invested in today, has cash flows two years from now that depend on the state of the economy. The cash flows when the factory is running at full capacity are described by the following tree diagram: Year 0 Year 1 Year 2 $ 1 billion if 2 good years GB 200 million if 1 good and 1 bad year BG $500 million if 2 bad years
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