A Decision Tree Shows a 30 Percent Probability of $2

question 59

Multiple Choice

A decision tree shows a 30 percent probability of $2 million in returns and a 70 percent chance of $1 million in returns.What is the maximum you would invest today in this project if the cash in-flow occurs one year in the future and the discount rate is 10 percent? (Use the values in dollar)

• A)$818,182
• B)$1,181,818
• C)$1,300,000
• D)$1,363,636

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Definitions:

Consciousness

The state of being aware of and able to think about one's self, surroundings, and thoughts.

Philosophical Issue

A fundamental question or problem that involves the study of values, reason, mind, and existence, and is debatable or requires thought.

Nature and Nurture

A debate concerning the relative importance of an individual's innate qualities (nature) versus their personal experiences (nurture) in determining or causing differences in physical and behavioral traits.

Determinism

The philosophical view that all events, including moral choices, are completely determined by previously existing causes.