(Abandonment Option)Hit or Miss Sports Is Introducing a New Product

question 8

Essay

(Abandonment Option)Hit or Miss Sports is introducing a new product this year.If its see-at-night soccer balls are a hit,the firm expects to be able to sell 50,000 units a year at a price of $60 each.If the new product is a bust,only 30,000 units can be sold at a price of $55.The variable cost of each ball is $30,and fixed costs are zero.The cost of the manufacturing equipment is $6 million,and the project life is estimated at 10 years.The firm will use straight-line depreciation over the 10-year life of the project.The firm's tax rate is 35% and the discount rate is 12%.
a.If each outcome is equally likely,what is expected NPV? Will the firm accept the project?
b.Suppose now that the firm can abandon the project and sell off the manufacturing equipment for $5.4 million if demand for the balls turns out to be weak.The firm will make the decision to continue or abandon after the first year of sales.Does the option to abandon change the firm's decision to accept the project?

Understand the concept and impact of "objectivity" in journalism and how it is perceived as a socially constructed set of practices.

Explore why news from different outlets appears similar and the factors influencing this phenomenon.

Overview of the role of structure and selective processes in media and scholarly publishing.

Understand the myths and realities regarding government regulation of the media.

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Definitions:

Aggressive Individuals

Refers to persons who exhibit behavior that is forceful, assertive, or intended to dominate.

Derogation of Target Bias

A cognitive bias in which individuals devalue a target or outcome once it becomes unattainable, often to reduce cognitive dissonance.

Intellectual Incompetence

A state or condition wherein an individual lacks the necessary cognitive skills or knowledge to understand or address specific issues effectively.

Hostile Attribution Bias

The habit of interpreting the conduct of others as aggressive, regardless of whether such conduct is vague or innocent.