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SA procet requires an investment of 100 ut und another investment of 100 at t-l. A cash will be generated at t-1 if and only
SA procet requires an investment of 100 ut und another investment of 100 at t-l. A cash will be generated at t-1 if and only if proth investment have been made. The value of X is contingent on the state of the industry at 1: State of industry Market return (6) 420 Bad 18 Ciood 70 The risk-free interest rate be 2% -- (a) Calculate the state prices (b) What is the NPV of the project if the state of industry at t-1 is known after the second investment is paid. That is the NPV of the project if an additional spending of $10 at t=0 makes it possible to know the state of industry at t=1 befom cond investment is paid
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