DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the 2 nd year. What is the Expected NPV of the project if they abandon Scenario 3at the end of year 2 ? WACC for the project 0.080 data in thousands \table[[, 0, 1, 2, 3], [Initial costs,,2, 993,,], [, Prob,,,], [Scenario 1,25%, 2,590,2,590, 2, 590], [Scenario 2, 60%, 1,790, 1,790, 1, 790], [Scenario 3, 15%, - 772, -772, -772]] c DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the 2nd year. What is the Expected NPV of the project if they abandon Scenario 3at the end of year 2? WACC for the project 0.080 data in thousands 0 1 2 3 Initial costs 2,993 Prob Scenario 1 25% 2,590 2,590 2,590 Scenario 2 60% 1,790 1,790 1,790 Scenario 3 15% -772 -772 -772
DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the 2 nd year. What is the Expected NPV of the project if they abandon Scenario 3at the end of year 2 ? WACC for the project 0.080 data in thousands \table[[, 0, 1, 2, 3], [Initial costs,,2, 993,,], [, Prob,,,], [Scenario 1,25%, 2,590,2,590, 2, 590], [Scenario 2, 60%, 1,790, 1,790, 1, 790], [Scenario 3, 15%, - 772, -772, -772]] c DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the 2nd year. What is the Expected NPV of the project if they abandon Scenario 3at the end of year 2? WACC for the project 0.080 data in thousands 0 1 2 3 Initial costs 2,993 Prob Scenario 1 25% 2,590 2,590 2,590 Scenario 2 60% 1,790 1,790 1,790 Scenario 3 15% -772 -772 -772
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter14: Real Options
Section: Chapter Questions
Problem 4MC
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