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Whats the NPV OF THIS PROJECT IT THE COMPANY DELAYED THE START FOR ONE YEAR ? Digital Inc. is considering production of a new cell
Whats the NPV OF THIS PROJECT IT THE COMPANY DELAYED THE START FOR ONE YEAR ?
Digital Inc. is considering production of a new cell phone. The project will require an investment of $20 million. If the phone is well-received, the project will produce cash flows of $10 million a year for 3 ears; but if the market does not like the product, the cash flows will be only $5 million per year. There is a 50% probability of both good and bad market conditions. Digital can delay the project a year while it conducts a test to determine whether demand will be strong or weak. The delay will not affect the project's cost or its cash flows. Digital's WACC is 10% wher = Step by Step Solution
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