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1. The price of a unit to be manufactured can follow one of three poten- tial...

1. The price of a unit to be manufactured can follow one of three poten- tial paths with equal probability:

Path Period 0 Period 1 Period 2
Path A $35 $40 $45
Path B $35 $40 $40
Path C $35 $35 $35
Path D $35 $30 $25

Suppose that after Period 1 the price is $35.00 or $30.00, then what is the NPV of investing the second half of the $12,800.00?

(200 units each year for period 1/2)

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