The Net Present Value of a Project Is Normally Distributed

question 73

Multiple Choice

The net present value of a project is normally distributed with an expected value of $52,000 and a standard deviation of $31,515.Determine the probability that the project will have a net present value of less than zero.

• A)1.65%
• B)95.1%
• C)4.95%
• D)cannot be determined

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Definitions:

Coupon Rate

The annual interest rate payable on a bond's face value by its issuer, representing the yield paid to bondholders.

Par Value

A nominal value assigned to a security by the issuer, often used in the context of bonds or stock.

Yielding

The income return on an investment, such as the interest or dividends received from holding a particular security.

FASB 13

Accounting standard issued by the Financial Accounting Standards Board related to lease accounting.