A two-period project has the following probabilities and cash flows:
Probability Cash flow
Period 1: .25 500
.50 600
.25 700
Period 2: .30 300
.50 500
.20 700
The discount rate is 7%, and the initial investment is $1,000. How much is the expected NPV of this project?
$-20.
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The income effect of an increase in the price of salmon
A) refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant. B) is the change in the demand for salmon when income increases. C) refers to the relative price effect—salmon is more expensive compared to other types of fish—which causes the consumer to buy less salmon. D) is the change in the demand for other types of fish, say trout, that results from a decrease in purchasing power.
What method was not used by the US between 1880 and 1920 to limit the number of immigrants?
a. Outlawing the practice of prepaying the cost of an immigrant's voyage in exchange for future labor services. b. Implementing a financial test for potential immigrants. c. Utilizing a literacy test for potential immigrants. d. Allowing only immigrants who had family members in the US to come in.
The opportunity cost of an airplane flight: a. differs across passengers only to the extent that each traveler pays a different airfare
b. is identical for all passengers and equal to the number of hours a particular flight takes. c. differs across passengers to the extent that both airfares paid and the highest valued use of travel time vary. d. is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.
With a corrective tax, the supply curve for pollution is
a. vertical. b. horizontal. c. upward-sloping. d. downward-sloping.