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##### Lindley Corp. is considering a new product that wi...

**Description**

Solution

**Question**

Lindley Corp. is considering a new product that will require an investment of $10 million now, at t = 0. If the new product is well received, then the project will produce after-tax cash flows of $5 million at the end of each of the next 3 years (t = 1, 2, 3), but if the market does not like the product, the cash flows will be only $2 million per year. There is a 50% probability that the market will be good. The firm could delay the project for a year while it conducts a test to determine if demand is likely to be strong or weak. The project's cost and expected annual cash flows will be the same whether the project is delayed or not. The project's WACC is 10.0%. What is the value (in thousands) of the project after considering the investment timing option?,This is also the way I worked the problem and got the same result but the answer is not any of the options for my assignment! HERE ARE THE OPTIONS: a. $1,311 b. $1,457 c. $1,619 d. $1,799 e. $1,999,I would prefer no later than 3PM today August 19th! It's not due until midnight but this is the only question on my assignment that I am struggling with so please answer as quickly as possible! Thanx for your time!,My problem...this is not the correct problem I replied to. You have ansered this question correctly but I am having a hard time with a different problem worked by a tutor! Thank you for your speed and accuracy!

Paper#2481 | Written in 18-Jul-2015

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