Question: ABC Compary is conducting a project with an up-front cost at t=0 of $1,100,000. The project's subsequent cash flows depends on whether a competitor's prodiuct

 ABC Compary is conducting a project with an up-front cost at

ABC Compary is conducting a project with an up-front cost at t=0 of $1,100,000. The project's subsequent cash flows depends on whether a competitor's prodiuct is approved by FDA. There is a 60% chance that the competitive product will be rejected, in which case the companys expected cash flows wia be 5502.656 at the end of each of the next four years (t=1 to 4). There is a 40% chance that the competitor's product wil be approved, in which case the expected cash flows will be only $157,461 in t=1 to 4 . The company will know for sure one year from today whether the competitors product has been approved. If the company waits a year, the project's up-front cost at t=1 will remain at $1,100,000. The subsequent cash flows will also remain the same with the same probabilities as no waiting but will be received only for three vears (t=2104). All cash flows are discounted at the company's WACC of 10s, What will the NPY at t=0 foc ench of the two strategies be? Round your answer to the nearest dollar, eg, xoxuco. IHint: Refer to the Evaluation of investment Timing Option example in Real Options] NPV at t=0 if the compary proceeds today =5 NPV at t=0 if the company waits a year =$ ABC Compary is conducting a project with an up-front cost at t=0 of $1,100,000. The project's subsequent cash flows depends on whether a competitor's prodiuct is approved by FDA. There is a 60% chance that the competitive product will be rejected, in which case the companys expected cash flows wia be 5502.656 at the end of each of the next four years (t=1 to 4). There is a 40% chance that the competitor's product wil be approved, in which case the expected cash flows will be only $157,461 in t=1 to 4 . The company will know for sure one year from today whether the competitors product has been approved. If the company waits a year, the project's up-front cost at t=1 will remain at $1,100,000. The subsequent cash flows will also remain the same with the same probabilities as no waiting but will be received only for three vears (t=2104). All cash flows are discounted at the company's WACC of 10s, What will the NPY at t=0 foc ench of the two strategies be? Round your answer to the nearest dollar, eg, xoxuco. IHint: Refer to the Evaluation of investment Timing Option example in Real Options] NPV at t=0 if the compary proceeds today =5 NPV at t=0 if the company waits a year =$

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