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Calculating npv of the project

At stage 2 of the decision tree it shows that if a project is successful, the payoff will be $53,000 with a 2/3 chance of occurrence. There is also the 1/3 chance of a $-24,000 payoff. The cost of getting to stage 2 (1 year out) is $44,000. The cost of capital is 15%. What is the NPV of the project at stage 1?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Calculating npv of the project

Reference No:- TGS0676805

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Analyzing the surprise ending

Q : Determine the budget for the department

Q : Compute the net present value of each opportunity

Q : The business activity for the current year

Q : Calculating npv of the project

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Calculating npv of the project

Reference No:- TGS0676805

Recent Questions Asked Finance Basics

Q : Analyzing the surprise ending

Q : Determine the budget for the department

Q : Compute the net present value of each opportunity

Q : The business activity for the current year

Q : Calculating npv of the project

Q : Calculate the inventory value at the end

Q : Explain public security market sufficient and survival bias

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Q : Calculate how does the use of a flexible budget

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