Question
Refer to Exhibit II. What is the expected NPV of the project? Round your final answer to the nearest dollar. $ If demand turns out
Refer to Exhibit II. What is the expected NPV of the project? Round your final answer to the nearest dollar. $
If demand turns out to be high, suppose that the firm has the option to invest an additional $100 at the end of Year 1 to increase production capacity. Doing so would result in an annual cash flow of $400 (rather than $200) at the end of Year 2. What is the expected NPV of the project, after accounting for this expansion option? Round your final answer to the nearest dollar. $
Refer to your previous answers. What is the value for this expansion option? Round your final answer to the nearest dollar. $
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