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The Walt Disney Company is contemplating investing in a new theme park project. The project has three potential scenarios with different cash flow projections: Best

The Walt Disney Company is contemplating investing in a new theme park project. The project has three potential scenarios with different cash flow projections:

  • Best Case Scenario: Initial Investment - $50,000,000, Year 1 Cash Flow - $10,000,000, Year 2 Cash Flow - $15,000,000, Year 3 Cash Flow - $20,000,000
  • Base Case Scenario: Initial Investment - $50,000,000, Year 1 Cash Flow - $8,000,000, Year 2 Cash Flow - $12,000,000, Year 3 Cash Flow - $16,000,000
  • Worst Case Scenario: Initial Investment - $50,000,000, Year 1 Cash Flow - $5,000,000, Year 2 Cash Flow - $7,000,000, Year 3 Cash Flow - $10,000,000

Evaluate the net present value (NPV) of the project under each scenario using a discount rate of 10% and recommend whether the company should proceed with the investment.

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