subject
Business, 20.02.2020 00:43 blueboy58

A firm is considering a 2-year project with an initial outlay of $12,000. The costs of operating in years1 and 2 are known with certainty to be $30,000. However, the revenues are uncertain. There is a50% chance that year 1 revenues will be $42,000 and a 50% chance that year 1 revenues will be$30,000. Second year revenues are also uncertain, but depend to some extent on the state realizedin year 1. If the good state is realized in year 1 (i. e., revenue of $42,000), there will be a 50% chanceof an upturn to $60,000 in year 2, and a 50% chance of a downturn to $36,000 in year 2. Similarly, ifthe bad state (i. e., revenue of $30,000) is realized in year 1, there will be a 50% chance of an upturnto $36,000 in year 2, and a 50% chance of a downturn to $12,000 in year 2.a. Use DCF analysis to find the expected NPV of this project, ignoring the option to abandon, assuming a 10% cost of capital. b. What is the project’s correct NPV, considering the abandonment option, and what then is the value of the option to abandon?

ansver
Answers: 3

Other questions on the subject: Business

image
Business, 22.06.2019 00:00, Bigbabybrudis
1tanner invested $135,000 cash along with office equipment valued at $32,400 in the company in exchange for common stock. 2 the company prepaid $7,200 cash for 12 months’ rent for office space. (hint: debit prepaid rent for $7,200.) 3 the company made credit purchases for $16,200 in office equipment and $3,240 in office supplies. payment is due within 10 days. 6 the company completed services for a client and immediately received $2,000 cash. 9 the company completed a $10,800 project for a client, who must pay within 30 days. 13 the company paid $19,440 cash to settle the account payable created on april 3. 19 the company paid $6,000 cash for the premium on a 12-month insurance policy. (hint: debit prepaid insurance for $6,000.) 22 the company received $8,640 cash as partial payment for the work completed on april 9. 25 the company completed work for another client for $2,640 on credit. 28 the company paid $6,200 cash in dividends. 29 the company purchased $1,080 of additional office supplies on credit. 30 the company paid $700 cash for this month’s utility bill. prepare general journal entries to record these transactions. 2. post the journal entries from part 1 to the ledger accounts.
Answers: 2
image
Business, 22.06.2019 10:20, itscheesycheedar
The different concepts in the architecture operating model are aligned with how the business chooses to integrate and standardize with an enterprise solution. in the the technology solution shares data across the enterprise.
Answers: 3
image
Business, 22.06.2019 12:20, Tierriny576
If jobs have been undercosted due to underallocation of manufacturing overhead, then cost of goods sold (cogs) is too low and which of the following corrections must be made? a. decrease cogs for double the amount of the underallocation b. increase cogs for double the amount of the underallocation c. decrease cogs for the amount of the underallocation d. increase cogs for the amount of the underallocation
Answers: 3
image
Business, 22.06.2019 18:00, Mw3spartan17
In which job role will you be creating e-papers, newsletters, and periodicals?
Answers: 1
You know the right answer?
A firm is considering a 2-year project with an initial outlay of $12,000. The costs of operating in...

Questions in other subjects: