There Is a 20% Probability That the NPV of a Project

question 19

Multiple Choice

There is a 20% probability that the NPV of a project will be $20 million,a 50% probability that it will be sold for $45 million and a 30% probability that it will be for $15 million.What is the expected NPV of the project?

• A)$17.5 million
• B)$45 million
• C)$31 million
• D)$26.67 million

---

Definitions:

Capitalism

An economic system based on private ownership of the means of production and their operation for profit, characterized by free markets, the accumulation of capital, and competition.

Norman Angell

British journalist, author, and Nobel Peace Prize laureate, best known for his work "The Great Illusion," which argued that the economic interdependence of nations would make war futile.