Stage 2 of a Decision Tree Shows That If a Project

question 8

Multiple Choice

Stage 2 of a decision tree shows that if a project is successful,the payoff will be $53,000 with a 2/3 chance of occurrence.There is also the 1/3 chance of a −$24,000 payoff.The cost of getting to Stage 2 (1 year out) is $24,000.The cost of capital is 15 percent.What is the NPV of the project at Stage 1?

• A)−$349.16
• B)−$231.88
• C)$108.17
• D)$133.33
• E)$147.59

---

Definitions:

Giraffes

Tall, long-necked ungulates native to Africa, known for their height and distinctive coat patterns.

Neck Length

The measurement from the base of the skull to the base of the neck, significant in various biological and anthropological studies.

Natural Selection

A process in evolutionary biology where organisms better adapted to their environment tend to survive and reproduce more than those less adapted, leading to evolutionary changes.

Variation Among Organisms

The differences in physical form, physiology, and behavior among individuals within a species, driven by genetic and environmental factors.