Question
BallGame.com Inc. is considering undertaking one of the two mutually exclusive projects: A and B. The firm is currently valued at $100M. Assume zero discount
BallGame.com Inc. is considering undertaking one of the two mutually exclusive projects: A and B. The firm is currently valued at $100M. Assume zero discount rate. Projects A and B have the following cash flows:
Find the expected value at each state of nature for a given range
|
|
| A | B | |
| Cash flows in year 0 (initial costs) |
| -50 | -50 | |
| Cash flows at the end of year 1 | Good State (prob.=1/3) | F>140 | 170 | 140 |
| Neutral State (prob.=1/3) | 100 | 100 | 120 | |
| Bad State (prob.=1/3) | F<140 | 0 | 40 | |
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Local Public Finance
Authors: René Geissler, Gerhard Hammerschmid, Christian Raffer
1st Edition
3030674681, 978-3030674687
