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What is the expected net present value of small plant

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Reference no: EM131749899

Question: (a) A one-period decision tree is given as follows:

208_Tree.png

Based on expected net present values, which alternative would you select?

(b) Suppose that you make the decision to build a small plant and market conditions have changed so that you now face the decision tree. If low sales are indicated, would you keep the plant or sell it? What is the expected net present value if a small plant is built?

Reference no: EM131749899

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