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Industrialization Enterprise is considering a three-year project that will require an initial investment of $43,500. If market demand is strong, Industrialization Enterprise thinks that the
Industrialization Enterprise is considering a three-year project that will require an initial investment of $43,500. If market demand is strong, Industrialization Enterprise thinks that the project will generate cash flows of $29,500 per year. However, if market demand is weak, the company believes that the project will generate cash flows of only $2,000 per year. The company thinks that there is a 50% chance that demand will be strong and a 50% chance that demand will be weak. If the company uses a project cost of capital of 10%, what will be the expected net present value (NPV) of this project? solve it
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