Sally Rubber Co . could spend $ 5 1 0 , 0 0 0 to build the
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Question:
Sally Rubber Co could spend $ to build the facility. Spending the additional $ on the facility will allow the company to switch the products they produce in the facility after the first year of operations if demand turns out to be weak in year If the company switches product lines because of low demand, it will be able to generate cash flows of $ in years and of the project.What is the expected NPV of this project if Sally Rubber Co decides to invest the additional $ to give themselves a flexibility option? Note: Do not round your intermediate calculations. $ $ $ $What will be the value of Sally Rubber Co's flexibility option?
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