Investment in the proposed project

Reference no: EM1351648

You are evaluating a proposed project. You find the DCF-NPV is -$50,000. However, by investing today, you think you might have a future growth option to expand but it would cost you an additional $100,000(in today's dollars) to have this option.
If this future opportunity occurs, you estimate the present value of this option will be $500,000. However there is a 60% chance of this occurring. Does the growth option make investment in the proposed project a positive NPV ?

a Yes the NPV is $50,000
b Yes the NPVis $100,000
c Yes the NPV is $125,000
d Yes the NPV is $150,000

Reference no: EM1351648

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