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:

Hermaphrodite

An organism that has both male and female reproductive organs, allowing it to produce both sperm and ova.

Estrogen

A group of steroid hormones that play a crucial role in the female reproductive system and the development of female secondary sexual characteristics.

Congenital Adrenal Hyperplasia

A group of inherited genetic disorders affecting the adrenal glands, resulting in abnormal hormone production.

Androgens

Male sex hormones, such as testosterone, responsible for the development and maintenance of male characteristics and reproductive functions.