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When Elon Musk’s firm was estimating the expected NPV from providing customers with space travel, the financial analyst assumed the revenue in year 1 of operations would equal $1.2 billion. Given all of her other assumptions, the expected NPV turned out to equal $13.8 billion and, therefore, the CFO was planning to recommend the investment. Before a final decision was made, a senior financial analyst applied break even analysis based on the forecasted revenue in year 1 and it turned out that if revenue in year 1 dropped from $1.2 billion to 1.0 billion, the investment would break even (NPV = $0). If you were senior financial analyst, how would you interpret the results of your break even analysisand, in your opinion, how would the results impact the recommendation to invest?
 
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