A Project Has an Expected Net Present Value of $50,000

question 34

Multiple Choice

A project has an expected net present value of $50,000 with a standard deviation of the net present value of $20,000. Assume that NPV is normally distributed. What is the probability that the project will have a negative NPV?

• A) 99.38%
• B) 0.62%
• C) 34.5%
• D) 49.38%

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Definitions:

Economic Inefficiencies

Situations where resources are not allocated optimally according to some criteria, leading to wasted or less effective outcomes.

Monopolistically Competitive

A commercial structure where many entities vend offerings that are similar in nature but not the same, allowing for slight dominance in the market.

Productive Efficiency

A state where a system can't produce more of one good without reducing the output of another, utilizing resources in the most cost-effective way.

Economic Profit

The discrepancy between the total sales of a corporation and its cumulative expenditures, including both manifest and concealed costs.