In the previous problem, suppose you think it is likely that expected sales will be revised upward
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In the previous problem, suppose you think it is likely that expected sales will be revised upward to 17,000 units if the first year is a success and revised downward to 3,400 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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Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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