Suppose investment in the malted herring project (see Section 22.3) can be postponed to the end of

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Suppose investment in the malted herring project (see Section 22.3) can be postponed to the end of year 2.

(a) Build a two-year binomial tree with cash flows proportional to end-of-year values. Under what circumstances would you want to delay construction for two years?

(b) How does this additional choice affect project NPV?

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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Question Posted: Jun 09, 2011 05:31 AM

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Suppose investment in the malted herring project (see Section 22.3) can be postponed to the end of

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Principles of Corporate Finance

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