A Project Has a 50% Chance of Doubling Your Investment

question 9

Multiple Choice

A project has a 50% chance of doubling your investment in one year and a 50% chance of losing half your money.What is the expected return on this investment project?

• A) 0%
• B) 25%
• C) 50%
• D) 75%

---

Definitions:

Working Capital

It is the difference between a company's current assets and current liabilities, indicating the liquidity available to fund operations.

Distributorship

A business arrangement in which one company grants another company or individual the right to sell its goods or products within a specified territory or market.

Annual Net Cash

The total amount of cash that a business generates and uses over a one-year period, after all expenditures are accounted for.

After-Tax Discount Rate

The rate used to discount future cash flows after taxes in investment analysis to find their present value.