If Spitfire elects to do the project, what is an abandonment option at the end of year
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If Spitfire elects to do the project, what is an abandonment option at the end of year 1 worth if Spitfire can recover $8 million of the initial investment into other uses at that time? If the recovery is $13 million?
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With an abandonment option the decision tree becomes M The NPVs and probabilities of paths 1 and 2 a...View the full answer
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