Suppose the Oil Price Is Uncertain and Can Be $60/bbl

question 30

Multiple Choice

Suppose the oil price is uncertain and can be $60/bbl or $30/bbl next year with equal probability, then expected NPV of the project if postponed by one year is: (approximately)

• A) +50 million
• B) -25 million
• C) +59 million
• D) None of the above

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Definitions:

Central

Referring to the primary or most important part, or located at the center.

Corporate

Relating to a large company or group, or pertaining to corporate businesses and their activities, strategies, and structure.

Fiber-Optic Cable

A type of cable made of glass fibers that transmit data at high speeds over long distances using light signals.

Twisted-Pair Cable

Cable made of copper wires that are twisted around each other and are surrounded by a plastic jacket (such as traditional home phone wire).