Question
Stage 2 of a decision tree shows that if a project is successful, the payoff will be $60,000 with a 75% chance of occurrence. There
Stage 2 of a decision tree shows that if a project is successful, the payoff will be $60,000 with a 75% chance of occurrence. There is also the 25% chance of a $18,000 payoff. The cost of getting to Stage 2 (1 year out) is $35,000. The cost of capital is 10 percent. What is the NPV of the project at Stage 1?
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
6th Edition
1473749247, 9781473749245
