Decision Tree The Yoran Yocht Company (YYC), a prominent sailboat builder in Newport, may design a new 30-foot sailboat based on the "winged" keels first introduced on the 12-meter yachts that raced for the America's Cup. First, WYC would have to invest $10,000 att for the design and model tank testing of the new boat. YYC's managers believe that there is a 60% probability that this phase will be successful and the project will continue. If Stage 1 is not successful, the project will be abandoned with zero salvage value The next stage it undertaken, would consist of making the molds and producing two prototype boats. This would cost $500,000 if the boats best well, ryc would go into production. If they do not the molds and prototypes could be sold for $100,000 Coccurs ott - ) The managers estimate that the probability is so that the boots will pos testing, and thar Stage will be undertaken Stage consists of converting an unused production line to produce the new design. This would cost $1 million att 2. If the economy is strong at this point, the value of sales would be 5 million while of the economy wenk the net value would be 51.5 million Both net values occut, and onch Mate of the economy has a probability of 0.5 Y corporate cost of capital 129 Assume thus were mkConstruct a decision tree and determine the project's expected NPV. Round your answer to the Decision Tree The Yoran Yocht Company (YYC), a prominent sailboat builder in Newport, may design a new 30-foot sailboat based on the "winged" keels first introduced on the 12-meter yachts that raced for the America's Cup. First, WYC would have to invest $10,000 att for the design and model tank testing of the new boat. YYC's managers believe that there is a 60% probability that this phase will be successful and the project will continue. If Stage 1 is not successful, the project will be abandoned with zero salvage value The next stage it undertaken, would consist of making the molds and producing two prototype boats. This would cost $500,000 if the boats best well, ryc would go into production. If they do not the molds and prototypes could be sold for $100,000 Coccurs ott - ) The managers estimate that the probability is so that the boots will pos testing, and thar Stage will be undertaken Stage consists of converting an unused production line to produce the new design. This would cost $1 million att 2. If the economy is strong at this point, the value of sales would be 5 million while of the economy wenk the net value would be 51.5 million Both net values occut, and onch Mate of the economy has a probability of 0.5 Y corporate cost of capital 129 Assume thus were mkConstruct a decision tree and determine the project's expected NPV. Round your answer to the
