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QUESTION 9 1 XYZ makes and sells sports drinks in Nevada. The objective of its managers is to maximize shareholder value. The firm is evaluating
QUESTION 9 1 XYZ makes and sells sports drinks in Nevada. The objective of its managers is to maximize shareholder value. The firm is evaluating a new project that would involve producing a sports drink with only organic ingredients. The company is located in Nevada, where the summers are frequently scorching (very hot and dry). Based on the information given in the question and the following table on the project, which assertion is true? Base-case NPV (based on final estimates and expectations) -$20,000 Value created if the scorching summer scenario occurs (based on scenario analysis) $400000 Value created if worst-case sales occur (based on sensitivity analysis) -$150,000 Value created if best-case sales occur (based on sensitivity analysis) $250.000 Probability that project will have NPV >0 (based on simulation analysis) 73% XYZ should accept the organic project XYZ should be indifferent between accepting and rejecting the organic XYZ should reject the organic project It is not clear whether XYZ should accept or reject the organic project, because th. information that is provided is contradictory with respect to answering the que It is not clear whether XYZ should accept or reject the organic project, because the cost of capital is not given TS
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