Question: A company is considering a project that will require an initial investment of $1,000,000. The project has a 60% chance of generating a net present

A company is considering a project that will require an initial investment of $1,000,000. The project has a 60% chance of generating a net present value of $2,000,000 and a 40% chance of generating a net present value of -$500,000. The company's risk tolerance is such that it cannot accept more than a 10% chance of losing more than $500,000 on the project. Assuming a risk-free rate of 4% and a market risk premium of 6%, what is the maximum investment the company can make in the project to meet its risk tolerance?

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