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Category > Business & Finance Posted 15 Jul 2017 My Price 12.00

The Option to Shut Down or Reopen a Project

The Option to Shut Down or Reopen a Project

We are examining a new project. We expect to sell 10,000 units a year of a new golf video at $200 net cash flow each for the next five years. The relevant discount is 15 percent and the initial required investment is $7 million.

a. What is the base case NPV?

b. After the first year, the golf video project can be abandoned and the machinery sold for $100,000. At what level of sales would it make sense to abandon the project?

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Status NEW Posted 15 Jul 2017 09:07 AM My Price 12.00

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