Economists at PHE Llc estimate a 20% probability of a recession next year, a 50% probability of an average economy, and a 30% probability of a rapid expansion. If there is a recession,
the NPV of project O will be $20 million; if the economy is average, it will be $45 million and in case of a rapid expansion, it will be $75 million. What is the expected NPV of the project?
A) $57.5 million
B) $49 million
C) $46.67 million
D) $45 million
Answer: B
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When preferred stock has a preference as to dividends, the current year's preferred dividend must be paid before a dividend can be paid to common stockholders
Indicate whether the statement is true or false
There is a duty to warn about risks that are obvious or commonly known
Indicate whether the statement is true or false
By changing a firm's capital structure to one more optimal, a firm may be able to
A) reduce its cost of capital. B) increase its value. C) find that more of its potential projects are financially attractive due to lower capital costs. D) find that all of the above are true.