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Comment on the following scenario: Your firm can enter a lottery for a contract. The probability of winning the contract is 1 in 100. It
Comment on the following scenario: Your firm can enter a lottery for a contract. The probability of winning the contract is 1 in 100. It is a $4,000,000 contract for the winner, and it will cost the firm $60,000 to prepare the documents to compete for the contract. What is the NPV of this lottery? Should the firm enter the lottery?
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