There is a 30% probability that an office building will be sold after 5 years for $30 million, a 50% probability that it will be sold for $20 million and a 20% probability that it will be sold for $10 million

What is the expected value of the office building in 5 years?
A) $20 million
B) $21 million
C) $30 million
D) $10 million


Answer: B

Business

You might also like to view...

Choose the correct verb in parentheses. (Lead, Led) by Whitaker and Ramirez, the team opened a 15-point lead in the first quarter

Business

Benefits of project audits include

A) reduce time and cost overruns during execution. B) reduce project risks. C) provide project details with a known degree of uncertainty. D) all of the above.

Business

In the context of a new product, the sales of the product most likely peak during the _____ of its life cycle.

A. introduction stage B. growth stage C. maturity stage D. decline stage

Business

Aroma Candles, Inc. is evaluating a project with the following cash flows. Calculate the IRR of the project. (Round to the nearest whole percentage.)

Year Cash Flows 0 ($120,000) 1 $30,000 2 $70,000 3 $90,000 A) 18% B) 23% C) 28% D) 33%

Business