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You are trying to decide whether to make an investment of $501.2 million in a new technology to produce Everlasting Gobstoppers. There is a 59%

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You are trying to decide whether to make an investment of $501.2 million in a new technology to produce Everlasting Gobstoppers. There is a 59% chance that the market for these candies will produce profits of $100.2 million annually, a(n) 21% chance the market will produce profits of $51.8 million, and a(n) 20% chance that there will be no profits. The size of the market will become clear one year from now. Currently, the cost of capital of the project is 10.52% per year. There is a(n) 21% chance that the cost of capital will drop to 9.29% in a year and stay at that level forever, and a(n). 79% chance that it will stay at 10.52% forever. Movements in the cost of capital are unrelated to the size of the candy market. Construct the decision tree that shows the choices you have: to make the investment either today or one year from now. What decision should you make if the one-year cost of capital is 15.05% and the profits last forever? You should because the NPV of this choice is \& million. (Round to two decimal places.)

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