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For questions 10 and 11, use the following information. The Quick-Start Company has the following pattern of potential cash flows with its planned investment in
For questions 10 and 11, use the following information. The Quick-Start Company has the following pattern of potential cash flows with its planned investment in a new cold weather starting system for fuel injected cars. t = 0 t = 1 t = 2 Success, $220 min Success, Invest $-100 min prob. = 0.8 A prob. = 0.2 B prob. = 0.6 Fail, $0 Test cost prob. = 0.4 $-20 min Fail, $0 Do not test If the company has a discount rate of 17%, what is the expected NPV of the project at node B at time 1? A. $150.43 million B. $76 million C. $88.03 million D. $50.43 million E. $120 million
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