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The Bursar at Tain came up with new library project that requires an initial investment of $100 and has the following cash flow estimates (ignore
The Bursar at Tain came up with new library project that requires an initial investment of $100 and has the following cash flow estimates (ignore taxes):
Pessimistic Most Likely Optimistic
Revenues $15 $20 $25
Costs 8 8 8
Suppose the cash flows will last forever and the opportunity cost of capital is 10%. Conduct a sensitivity analysis of the projects NPV to variations in revenues. What is the NPV in the pessimistic scenario?
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