Make the project acceptable to the company

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Reference no: EM132001585

Eclipse, Inc., has a new project under consideration that will require an investment of $6.9 million today. If the project is successful, the cash flows will be $2.6 million for 12 years. If the project is unsuccessful, the cash flows will be $285,000 per year. Additionally, the company could sell the project’s fixed assets in one year and realize an aftertax salvage value of $4.7 million. The required return is 16 percent. What is the minimum probability of success that will make the project acceptable to the company?

Reference no: EM132001585

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