Lindley Corp

question 22

Multiple Choice

Lindley Corp.is considering a new product that would require an investment of $10 million now,at t = 0.If the new product is well received,then the project would produce after-tax cash flows of $5 million at the end of each of the next 3 years (t = 1,2,3) ,but if the market did not like the product,then the cash flows would be only $2 million per year.There is a 50% probability that the market will be good.The firm could delay the project for a year while it conducts a test to determine if demand is likely to be strong or weak.The project's cost and expected annual cash flows would be the same whether the project is delayed or not.The project's WACC is 10.0%.What is the value (in thousands) of the project after considering the investment timing option?

• A)$ 726
• B)$ 807
• C)$ 896
• D)$ 996
• E)$1,106

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Marketing strategies focused on attracting consumers by advertising lower prices or special deals for a limited time.

Viral Marketing

A marketing strategy that relies on social networks to rapidly spread a message or product information, much like a virus.

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