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Dunder Mifflin Paper Company is evaluating a new product launch that will cost it $39379 to launch. The company projects it will generate $753151 in
Dunder Mifflin Paper Company is evaluating a new product launch that will cost it $39379 to launch. The company projects it will generate $753151 in annual operating cash flow at the end of each of the next 4 years, after which it will discontinue the product. The appropriate discount rate for the product is 15%. If after the first year, the product is doing worse than expected, then the company projects annual cash flows will only be $271934 for the remaining three years of the project. What is the minimum amount for which the company would be willing to shut down the product line at that time (i.e. one year from now) in such a case? Select one: a. $620887 b. $1451912 c. $508398 0 d. $581508 e. $1719613
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