A New Business Opportunity Has a 70% Chance of Being

question 32

Multiple Choice

A new business opportunity has a 70% chance of being worth $500,000 next year and a 30% chance of being worth $100,000. The appropriate expected rate of return is 10%.
-Refer to the information above. What is the present value of this investment? Round your answer to the nearest dollar.

• A)$454,545
• B)$345,455
• C)$200,000
• D)$272,727