Question: Consider the following potential outcomes for a project: Outcome Probability Quantitative Outcome Total Failure 40% Project yields technology that will earn the company $1,000/yr for
Consider the following potential outcomes for a project: Outcome Probability Quantitative Outcome Total Failure 40% Project yields technology that will earn the company $1,000/yr for 5 years. Partial Failure 40% Project yield technology that will earn the company $1,000/yr for 15 years. Total Success 20% Project yields technology that will earn the company $5,000/yr forever. If investment in the project costs $10,000 and the annual discount rate for a project of this risk-level is 10%, what is the expected Net Present Value?
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
