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You are considering a project that offers up the following possible payout with an opportunity cost of 20%. Time 0 1 2 Base Case -$60,000

You are considering a project that offers up the following possible payout with an opportunity cost of 20%.

Time 0 1 2

Base Case -$60,000 10,000 10,000

At the end of year two you know there is a 10% possiblity you will buy out your competitor which has the potential to create opportunities that are worth $982,631 at that time.

How much potential value is created or lost by taking on this project (i.e. what is the NPV)?

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