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A firm is considering investing $10 million today to start a new product line The future of the project is unclear however and depends on the state of the economy The project will last 5 years The

A firm is considering investing $10 million today to start a new product line. The future of the project is unclear however and depends on the state of the economy. The project will last 5 years. The yearly cash flows for the project are shown below for the different states of economy. What is the expected NPV for the project if the cost of capital is 12%? Project outcome _________Chance of outcome _________Yearly cash flow Good ....................................... 25% .................................. $8.00 Average .................................... 50% .................................. $3.00 Bad ......................................... 25% ................................. ($2.00) a. -$2.23 million b. -$1.15million c.-$0.75 million d. $0.81 million

 

May 26 2020 View more View Less

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