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

question 23

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) $818,182
• B) $1,181,818
• C) $1,300,000
• D) $1,363,636

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Definitions:

Cultures

The customs, arts, social institutions, and achievements of a particular nation, people, or other social group.

National Borders

Geographical boundaries that separate different countries and define the territorial jurisdiction of each nation.

Adapt

To modify oneself or one's behavior to better suit a new or changing environment or situation.

Negotiator

is an individual engaged in discussion with the aim of reaching an agreement or resolving a dispute between two or more parties.