The price of a unit to be manufactured can follow one of


The price of a unit to be manufactured can follow one of three potential paths with equal probability

Path Period 0 Period 1 Period 2

A $35.00 $40.00 $45.00

B $35.00   $40.00   $40.00

C $35.00 $35.00   $35.00

D $35.00 $30.00 $25.00  

Suppose that after period 1 the price is $35.00 or $30.00, then what is the NPV of investing the second half od the $12,800? What is the NPV ($35) and NPV ($30)

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Financial Management: The price of a unit to be manufactured can follow one of
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