If MacCaugh's Pilot Project Is Successful,it Will Be Able to Build

question 52

Multiple Choice

If MacCaugh's pilot project is successful,it will be able to build a plant with an NPV of $2 million in 1 year's time.Otherwise the pilot investment will be valueless.If the discount rate is 20% and the chances of success are 50%,how much can MacCaugh afford to spend on the pilot project?

• A) $1 million.
• B) $2 million.
• C) $1.667 million.
• D) $833,333.

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