Consider an industry with steadily declining demand. A firm…
Consider an industry with steadily declining demand. A firm can choose to stay or exit. If it exits, it can sell of its assets and recover a scrap value of $4500. If it stays, its future stream of payoffs is: t = 0 t = 1 t = 2 t = 3 Payoff from staying 1500 1500 1000 500 Assume that the interest rate is 10%, so r = 0.1. Round your answers to 2 decimal places. What is the PDV of payoffs from staying? Should the firm stay in the industry? (Type in “Yes” or “No”)