Question: ABC invests in a project that has a 69% chance of success and a 31% chance of failure.If the project succeeds, the project's cash flow
ABC invests in a project that has a 69% chance of success and a 31% chance of failure.If the project succeeds, the project's cash flow from operation is $1.3 million at the end of the year. If they fail, the project's cash flow from operations is a loss of $279046 at the end of the year. What is the most that ABC should invest in the project today?The projects required rate of return is 12.8%.
a.
$ 718525
b.
$ 431115
c.
$ 639487
d.
$ 537456
e.
$ 668228
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