Your company builds a new plant with an investment of $200 million and an expected present value from its future cash flows of $250 million. A year later, it becomes apparent that the new product isn't selling as well as expected, and the present value of future cash flows at that point is only worth $150 million. Should the company shut down the plant?

Yes, the NPV is now negative.

No, the present value of continuing the project is positive at this point.

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The correct answer is No the present value of continuing the project i... View the full answer