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Consider again the project in Problem 17.2, only suppose that the widget price is unchanging and the cost of investment

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Consider again the project in Problem 17.2, only suppose that the widget price is unchanging and the cost of investment is declining at 2% per year. When will you invest? What is the value today of the project?
In problem 17.2
You have a project costing $1.50 that will produce two widgets, one each the first and second years after project completion. Widgets today cost $0.80 each, with the price growing at 2% per year. The effective annual interest rate is 5%.

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Derivatives Markets

Derivatives Markets

ISBN: 978-0321543080

4th edition

Authors: Rober L. Macdonald

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Question Posted: December 18, 2015 05:12:33
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