If the project can be sold/abandoned for a resale value of $100 million next year, what is its value in terms of the decision tree analysis (DT)?
A project has a present value (PV) of $100 million today and a 50% probability to be worth either $130 million or $90 million next year. Assume that the WACC is 10%, the simple annual risk-free rate is 4%, and the project costs $103 million today. 1. Should you do the project based on the […]