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Question:
The project with Machine L is worth $10 million today and will be $12 million one year from today with high demand and $9 million with low demand. Machine H can be modified and sold off for $10 million if the demand is low.
a. What is the percent of moving up when the demand is high?
b. What is the risk neutral probability of up move?
c. How much will machine H cost more than machine L?
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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