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Your firm has an opportunity to invest in a project that costs $800 and you expect it to return two payments of $500 per year.
Your firm has an opportunity to invest in a project that costs $800 and you expect it to return two payments of $500 per year. The interest rate of the project is 10%. The current NPV of the project is $67.77. You also have the option to wait one year to invest $800. If you wait, you will know for certain that one of two events will occur. Either you will receive two payments of $750 or two payments of $300. The payments of $750 are expected with a probability of 0.7 or alternatively, the two payments of $300 are expected with a probability of one minus the probability of the payments of $750. The interest rate of the project is still 10%. What is the current present value of the NPV, if they choose to wait
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