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Question
A project has a 50/50 chance of generating either a positive cash flow of $1 per year forever or a zero cash flow. The discount rate is 5 percent. If the initial cost is $10, what is the NPV with the option to stop after the first year?
a) –$10
b) $0
c) $10
d) $20
Answer
This answer is hidden. It contains 147 characters.
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