(a) The equivalent investment needed if the plant is built in 2015. (b) The equivalent investment needed had the plant been constructed in the year 2008.
(a) The equivalent investment needed if the plant is built in 2015. (b) The equivalent investment needed had the plant been constructed in the year 2008.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter14: Real Options
Section: Chapter Questions
Problem 4MC
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The Houston American Cement factory will require an investment of $200 million to construct. Delays beyond the anticipated implementation year of 2012 will require additional money to construct the factory. Assuming that the cost of money is 10% per year, compound interest . Determine the following for the board of directors of the Brazilian company that plans to develop the plant.
(a) The equivalent investment needed if the plant is built in 2015.
(b) The equivalent investment needed had the plant been constructed in the year 2008.
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