Question 6. (15 points) Caravan Gaming Company is interested in developing a new facility in Brazil. The company estimates that the project would require an initial investment of $31 million. The company expects that the project will produce positive cash flows of $5,050,000 a year at the end of each of the next 15 years. The project’s cost of capital is 14%.a. Calculate the expected net present value of the project.Using decision tree analysis, calculate the value of the real option to wait a year before deciding. Use a discount rate of 14 percentc. Discuss 2-3 other factors that the company should consider in making a decision to go ahead with the project now or wait for one year.
Question 6. (15 points) Caravan Gaming Company is interested in developing a new facility in Brazil. The company estimates that the project would require aninitial investment of $31 million. The…
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