A Decision Tree Shows a 30% Probability of $2 Million

question 85

Multiple Choice

A decision tree shows a 30% probability of $2 million in returns and a 70% chance of $1 million in returns. What is the maximum you would invest today in this project if the cash inflow occurs one year in the future and the discount rate is 10%?

• A) $818,181.82
• B) $1,181,818.18
• C) $1,300,000.00
• D)$1,430,000.00

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Definitions:

Distended Abdomen

The condition of having an abnormally swollen or enlarged belly, which can result from various medical conditions like fluid accumulation, gas, or obstruction.

Bronchiectasis

A condition characterized by the permanent enlargement of parts of the airways of the lung, leading to symptoms such as persistent cough, mucus production, and recurrent respiratory infections.

Osteoporosis

A bone disease characterized by decreased density and quality of bone, leading to increased fragility and risk of fractures.

Abdominal Surgery

A surgical procedure performed on the organs of the abdominal cavity, such as the stomach, liver, intestines, and pancreas.