Examlex
Assume the following data for Project X: NPV of the project without abandonment: −$2 million; abandonment option value: $4 million. Calculate the adjusted present value (APV) of the project.
Risk Averse
The preference to avoid uncertainty, expressing a behavior where individuals prefer known risks over unknown outcomes.
Financial Investment
Allocating money into an asset or a project with the expectation of generating income or profit.
Government Bond
A type of investment where an investor loans money to a government in exchange for periodic interest payments plus the return of the bond's face value at maturity.
Moral Hazard
The situation where one party in a transaction has the opportunity to take risks because they know the other party will bear the costs.
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