Question
For questions 10 and 11, use the following information. The Quick-Start Company has the following pattern of potential cash flows with its planned investment in
For questions 10 and 11, use the following information.The Quick-Start Company has the following pattern of potential cash flows with its planned investment in a new cold weather starting system for fuel injected cars.
If the company has a discount rate of 17%, what is the expected NPV of the project at node B at time 1?
A.$76 million
B.$120 million
C.$88.03 million
D.$150.43 million
E.$50.43 million
If the company has a discount rate of 17%, what is the expected NPV at node A at time 0? Should it decide to invest?
A.no,expected NPV at node A= $-41.33 million
B.no, since more than one branch has $0 cash flow, the firm must reject.
C.yes,expected NPV at node A= $25.6 million
D.yes, expected NPV at node A = $5.86 million
E.yes,expected NPV at node A= $100 million
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