Question: considering an option to expand when calculating a project's NPV. The NPV at t=0 for the project with no expansion is -$4,773. The NPV at

considering an option to expand when calculating a project's NPV. The NPV at t=0 for the project with no expansion is -$4,773. The NPV at t=0 for the expansion part of the project is $79,436. First, what is the NPV at t=0 for the project if the expansion occurs. Second, what is the overall project NPV at t=0 if the probability of expansion is 50%?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!