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i really need your help rn tof estion Houndlight is considering openning a new store in Brisbane. Houndlight must open the new store either now
i really need your help rn
tof estion Houndlight is considering openning a new store in Brisbane. Houndlight must open the new store either now or in exactly one year. If Houndlight opens the store now, it will cost Houndlight $3.9 million immediately to open the new store. Houndlight expects to receive an annual cash flow of $710000 in perpetuity. Houndlight has the option to close the store at the end of the third year and sell the store for $23.667 million. If Houndlight opens the store in one year, the probability of market demand being high and low is 43% and 57%, respectively. If the market demand is high, Houndlight will spend $7.2 million to open the new store, and expect to receive an annual cash flow of $150000 in perpetuity. If the market demand is low, Houndlight will spend $3.6 million to open the new store, and expect to receive an annual cash flow of $90000 in perpetuity. The cost of capital for this project is assumed to be 3.3%. The NPV of this project for Houndlight is closest to: O a. $-1.59 million O b. $19.57 million O c. $17.61 million O d. $21.52 million & Step by Step Solution
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