Without any of these investments, the projected PV tree cannot be realized. The simple annual risk-free rate is 5%. What is the value of the project today?
The present value (PV) of a new project is $100 million today, and it will either increase by 25% or decrease by 25% per year for the next two years. This project requires optional multi-stage investments: $5 million today, $10 million next year, and $90 million in two years. Without any of these investments, the […]