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A project requires an initial investment of $150. Your research generates the following estimates of revenues and costs: The cost of capital equals 10%. Pessimistic
A project requires an initial investment of $150. Your research generates the following estimates of revenues and costs: The cost of capital equals 10%.
Pessimistic | Most Likely | Optimistic | |
Revenues Costs | 30 25 | 50 20 | 65 15 |
Assume that the cash flows occur in perpetuity. What does a sensitivity analysis of NPV (without taxes) show? (Answers appear in order: [Pessimistic, Most Likely, Optimistic].) A) 50, -100, +400 B) -50, +300, +500 C) -100, +150, +350 D) +100, +150, +350
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