Multiple Choice
A firm is considering an investment project that today would cost $20,000. At the end of one year, there is a 70% probability that the investment will pay out $28,000 and a 30% probability that it will pay out $16,000. Using a 10% interest rate, what is the expected net present value of this investment?
A) -$670.85
B) $483.14
C) $2,181.82
D) $4,020.19
Correct Answer:
Verified
Correct Answer:
Verified
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