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A Firm Has Estimated the NPV of a New Product

Question 41

Multiple Choice

A firm has estimated the NPV of a new product release as -$100,000.However,if the product is a failure,the firm estimates it can sell off the equipment to help cash flow.An analyst estimates the value of abandoning the product release at $125,000.The cost of capital for the firm is 10%.What is the project value for the firm?


A) -$100,000
B) $10,000
C) $25,000
D) $225,000

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