Question: Real Options: Binomial Model An analyst has projected the NPV outcomes for a project and has determined that the project has two possible outcomes. The

Real Options: Binomial Model

An analyst has projected the NPV outcomes for a project and has determined that the project has two possible outcomes. The project has a 40% chance of having an NPV of $1.5 Million, and a 60% chance of being worth -$200,000. If the correct discount rate is 12%.

A: Should the company take on this project?

B: What is the NPV of this project?

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