Unformatted text preview: is 79,247. The NPV of the top row is 79,247 – 20,000 – 17,800 = 41,447. The NPV of the bottom row is still 11,332, as it was in part a. The ENPV is 41,447 (0.40) 11,332 (0.60) = $9,786. ENPV = 23,388 (0.40) – 11,322 (0.60) = $2,562. This is the ENPV of the project including the growth option. The value of the growth option itself is the difference: Value of growth option = 9,786 – 2,562 = 7,224. r = 10% r = 10%...
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 Spring '08
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 Net Present Value, Riskfree interest rate

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