Question: Abandonment in the previous problem, suppose you think it is likely that expected sales will be revised upward to 9.000 units if the first year

Abandonment in the previous problem, suppose you think it is likely that expected sales will be revised upward to 9.000 units if the first year is a success and revised downward to 4.000 units if the first year is not a success.

a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering.

b. What is the value of the option to abandon?

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a If the project is a success present value of the future cash flows will be PV future CFs 659000PVI... View full answer

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