A Project with a 3-Year Life Has the Following Probability

question 40

Multiple Choice

A project with a 3-year life has the following probability distributions for possible end of year cash flows in each of the next three years: Using an interest rate of 8 percent,find the expected present value of these uncertain cash flows.(Hint: Find the expected cash flow in each year,then evaluate those cash flows. )

• A) $1,204.95
• B) $835.42
• C) $1,519.21
• D) $1,580.00
• E) $1,347.61

Grasp the relationship between marginal costs, marginal benefits, and efficient production levels.

Differentiate between marginal private cost and marginal social cost.

Identify examples of externalities in daily life and their impact on society.

Understand the concept of external costs and how they lead to overproduction in the absence of government intervention.

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