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5 5 points We are examining a new project. We expect to sell 6 , 3 0 0 units per year at $ 5 7
points We are examining a new project. We expect to sell units per year at $ net cash flow apiece for the next years. In other words, the annul operating cash flow is projected to be $$ The relevant discount rate is percent, and the initial investment required is $ After the firstyear the project can be dismantled and sold for $ Suppose you think it is likely that expected sales will be revised upward to units if the first year is a success and revised downiward to units if the first year is not a success. What is the value of the option to abandon? $ $ $ $
points
We are examining a new project. We expect to sell units per year at $ net cash flow apiece for the next years. In other words, the annul operating cash flow is projected to be $$ The relevant discount rate is percent, and the initial investment required is $ After the firstyear the project can be dismantled and sold for $ Suppose you think it is likely that expected sales will be revised upward to units if the first year is a success and revised downiward to units if the first year is not a success. What is the value of the option to abandon?
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