From purely shareholder perspective

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Your firm Dier-Streits is in the plumbing business. Lately things seem to be going down the tubes. Your firm's total asset value is estimated to be about $9 million, but debt payments of 10 million are due at the end of the year. You are considering a job that would require massive overtime but would create an NPV of -$3 million or $6 million with probabilities of .7 and .3, respectively.

a. What is the expected NPV of this project?

b. From a total firm value perspective, should you invest in this project?

c. From purely a shareholder's perspective, should you invest in this project?

Reference no: EM132056826

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