# Crip Inc. is considering a project which would require an \$8.5 million investment today (t = 0).

Crip Inc. is considering a project which would require an \$8.5 million investment today (t = 0). The after-tax cash flows the factory generates will depend on whether the state imposes a new property tax. There is a 40% probability that the tax will pass. If the tax passes, the factory will produce after-tax cash flows of \$0.7 million at the end of each of the next 5 years. There is a 60% probability that the tax will not pass. If the tax does not pass, the factory will produce after-tax cash flows of \$2.85 million for the next 5 years. The project has a WACC of 9%. If the factory is unsuccessful, the firm will have the option to abandon the project 1 year from now if the tax passes. If the factory project is abandoned,the firm will receive the expected \$0.7 million cash flow at t = 1, and the property will be sold netting \$8.15 million (after taxes are considered) at t = 1. Once the project is abandoned, the company would no longer receive any cash inflows from it. What is the project’s expected NPV if it can be abandoned?

a. \$1,088,775.25

b. \$1,399,010.08

c. \$1,875,544.33

d. \$2,100,000.00

e. \$2,585,506.10

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.