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Question 5 A firm is evaluating a product. The market demand for the product can be low or high. The product requires an investment of

Question 5

A firm is evaluating a product. The market demand for the product can be low or high.

The product requires an investment of $1,070.

If the market demand is low, then there is a 70% chance that the product will sell for $800 and a 30% chance it will sell for $1,200.

What is the NPV of the project if the market demand is low?

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