What Is the Maximum That Should Be Invested in a Project

question 83

Multiple Choice

What is the maximum that should be invested in a project at time zero if the inflows are estimated at $50,000 annually for 3 years,and the cost of capital is 9%?

• A) $101,251.79
• B) $109,200.00
• C) $126,564.73
• D) $130,800.00

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Definitions:

American Put Option

A type of option that allows the holder to sell an asset at a specified price at any time before the expiration date.

Call Option

An agreement in finance that grants the purchaser the option, without the mandate, to acquire a security, bond, commodity, or different asset at a pre-determined price during a defined timeframe.

Variance

The average squared deviation between the actual return and the average return.