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You are considering setting up a firm to produce widgets. The cost of the project is $30 today. The demand for widgets is uncertain. It can be either high or low with equal probability. When the demand is high cash flows in t = 1 are $66 and when the demand is low cash flows in t = 1 are $34. The discount rate is 10%. a) What is the NPV of the project?

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Financial Management, Finance

Category:- Financial Management
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