Question
In the example discussed in Notes pages 25-27, suppose we keep everything else the same but change the perpetual growth rate from 3 % to
In the example discussed in Notes pages 25-27, suppose we keep everything else the same but change the perpetual growth rate from 3 % to 2% , and the discount rate from 13% to 12% (in page 25), which of the following statement is NOT correct?
Before considering the option to abandon, the project has a negative NPV. After taking into consideration the option to abandon, the project has a positive NPV. | ||
For the location with first year cash flow of $10k, you would choose to close the restaurant. | ||
For the location with first year cash flow of $87k, you would choose to keep the restaurant running. | ||
For the location with first year cash flow of $30k, you would choose to close the restaurant. |
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