Scenario 15.6: Consider the Following Decision That Eileen Has to Make

Multiple Choice

Scenario 15.6:
Consider the following decision that Eileen has to make:
Eileen is considering buying a $4000 computer for her daughter. Eileen hopes that with the computer her daughter's schoolwork will improve so much that in two years time she will be offered a full-ride scholarship to college. The scholarship is paid for four years and is valued at $25,000 per year. Even with the computer the probability that the scholarship will be awarded is 10%.
-Refer to Scenario 15.6. The expected NPV of the computer purchase is approximately:

A) $3,200.
B) $5000.
C) $10,000.
D) $68,000.
E) $96,000.