Question
Your firm is considering designing a new computer/TV interface. If you design this product and demand is high, you believe the present value of cash
Your firm is considering designing a new computer/TV interface. If you design this product and demand is high, you believe the present value of cash flows will be $15 million. If demand is low, the present value of revenues will be only $3 million. The probability that demand will be high is 35%. The product will cost $7 million dollars to design. Which of the following best describes the NPV of the project.
The NPV is less than 0. | ||
The NPV is greater than 0 but less than $500,000. | ||
The NPV is greater than $500,000 but less than $1,000,000. | ||
The NPV is greater than $1,000,000 but less than $2,000,000. | ||
The NPV is greater than $2,000,000. |
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