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Your firm is considering a project with a five-year life and an initial cost of $120,000.The discount rate for the project is 12 percent.The firm expects to sell 2,100 units a year.The cash flow per unit is $20.The firm will have the option to abandon this project after three years at which time it expects it could sell the project for $50,000.You are interested in knowing how the project will perform if the sales forecast for years four and five of the project are revised such that there is a 50% chance that the sales will be either 1,400 or 2,500 units a year.What is the net present value of this project given your sales forecasts?
Exchange Rate
The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another currency.
Net Exports
The gap between what a country earns from exports and spends on imports.
Net Capital Outflow
The difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreign residents over a specified period.
Marginal Product
The increase in output that arises from an additional unit of input.
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