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20210207103022npv response

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Student’s Name
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February 7, 2021

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Since the NPV is not positive, delaying the project would be best. This would give the
company time to predict the demand and increase production when demand is high. This will
ensure that there is ready market for the increased volume produced (Beasley et.al, 2020).
However, in 1b, the scenario is well explained but a clear option is not given. The best option in
this case would be to go for the production option. Abandonment value and present value are
related. This is because when present value is high then abandonment value is low. One occurs in
the absence of the other hence they are mutually exclusive.

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Student’s Name Course Code Professor February 7, 2021 Response Since the NPV is not positive, delaying the project would be best. This would give the company time to predict the demand and increase production when demand is high. This will ensure that there is ready market for the increased volume produced (Beasley et.al, 2020). However, in 1b, the scenario is well explained but a clear option is not given. The best option in this case would be to go for the production option. Abandonment value and present value are related. This is because when present value is high then abandonment value is low. One occurs in the absence of the other hence they are mutually exclusive. References Beasley R., Meyers S. & Ellen F.(2020).Principles of Corporate Finance. Name: Description: ...
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