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Stay Swift Corp. Is looking at inventing in a production facilty that will require an initial investment of 3500,000 . The facility wilf have a

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Stay Swift Corp. Is looking at inventing in a production facilty that will require an initial investment of 3500,000 . The facility wilf have a three-year useful tife, and it will not hare any salvage value at the end of the project's life. If dernand ba strong, the facility wil bo able to generate annual cach. Hows of $255,000, but if demand burns out to be weak, the facility will generate annual cash flows of only $130,000,Stay Swift Corp. thinks that there is a 50% chance that demand will be strong and al 50% chance that demand will be weak: If the company uses a project cost of capital of 11sh, what will be the expected nct present value (Nov) of this project? Stay Swift Corp, could spend $510,000 to build the facitity. Spending the additional 510,000 on the farcility will allow the company to switch the products thery produce in the facility after the first year of operations if demand tumb out to be weak in year:1. If the company switches product lines becatuse of low dernatid, it will be able to oenarate cakh flows of $250,000 in years 2 and 3 of the project

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