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How much the project have to generate in the bad scenario

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Question - Consider a project that has an initial investment cost of $1.5 million, and in one year, will generate $2 million if things go well (good scenario), and $800,000 if things don't go well (bad scenario). Assume the probability of the good scenario is 60%, and that of the bad scenario is 40%. The discount rate is 10 percent (Please show the formulas for both please).

Required -

(a) What is the NPV of the project?

(b) How much would the project have to generate in the bad scenario for the project to be acceptable?

Reference no: EM132844510

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