OklahomaOklahoma Instruments (OI) Is Considering a Project Called F-200 That

question 20

Multiple Choice

OklahomaOklahoma Instruments (OI) is considering a project called F-200 that has an up-front cost of $250,000. The project's subsequent cash flows are critically dependent on whether another of its products, F-100, becomes an industry standard. There is a 50% chance that the F-100 will become the industry standard, in which case the F-200's expected cash flows will be $110,000 at the end of each of the next 5 years. There is a 50% chance that the F-100 will not become the industry standard, in which case the F-200's expected cash flows will be $25,000 at the end of each of the next 5 years. Assume that the cost of capital is 12%.
-Refer to Scenario: Oklahoma.Based on the above information,what is the F-200's expected net present value?

• A)-$6,678
• B)-$3,251
• C)$15,303
• D)$20,004

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Definitions:

Make-believe Play

Children's play that involves pretending and imaginative scenarios, often featuring role-play and fantasy characters.

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The observable signs of an individual's emotional state, often manifested through facial expressions, body language, and verbal cues.

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The ability to recognize, understand, and manage one's feelings and responses in different situations.

Scary Scene

A situation, depiction, or narrative in entertainment or reality that induces fear, fright, or terror.