If Venture Investors Invest $1,000,000 Now, Will Receive 50% of the Exit

question 23

Multiple Choice

If venture investors invest $1,000,000 now, will receive 50% of the exit value, and expect a 20% compounded rate of return on their investment, what will be the amount of the exit value at the end of two years?

• A)$5,760,000
• B)$1,440,000
• C)$2,880,000
• D)$5,000,000

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Definitions:

Critical Values

Critical values are specific points on the scale of a test statistic that determine the boundary for rejecting the null hypothesis.

Type I Error

The incorrect rejection of a true null hypothesis, or a false positive, in statistical hypothesis testing.

P-value

A measure in hypothesis testing that indicates the probability of obtaining a result at least as extreme as the one observed, assuming the null hypothesis is true.

Null Hypothesis

A statement in inferential statistics that there is no effect or no difference, and any observed deviation from this state is due to chance.