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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