A Project Has the Following Projected Outcomes in Dollars: $250

question 86

Multiple Choice

A project has the following projected outcomes in dollars: $250, $350, and $500. The probabilities of their outcomes are 25%, 50%, and 25%, respectively. What is the expected value of these outcomes?

• A) $362.5
• B) $89.4
• C) $94.5
• D) $178.3

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Definitions:

Net Present Value

The variance between the current worth of cash inflows and the current worth of cash outflows over a specific duration, employed to evaluate the profitability of an investment.

Discounted Payback Period

The length of time required for an investment’s discounted cash flows to equal its initial cost.

Accounting Basis

The method by which accounting transactions are recognized and recorded, such as cash basis or accrual basis accounting.

Financial Break-even

The point at which total revenues equal total expenses, and the company makes no profit or loss.