A Tennis Match Requires That a Player Win Three of Five

question 71

Multiple Choice

A tennis match requires that a player win three of five sets to win the match. If a player wins the first two sets, what is the probability that the player wins the match, assuming that each player is equally likely to win each match?

• A) 0.5
• B) 1/8 or 0.125
• C) 7/8 or 0.875
• D) Cannot be computed.

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Definitions:

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments, represented as the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Net Present Value

A valuation method that calculates the present value of expected future cash flows minus the initial investment cost.

Capital Investment Project

A project requiring significant amounts of capital for the purchase, improvement, or maintenance of long-term assets to generate future benefits.

Cash Flows

The sum total of currency transactions inbound and outbound in a firm, markedly affecting its cash-on-hand.