Question
If MacCaughs pilot project is successful, it will be able to build a plant with an NPV of $2 million in 1 years time. Otherwise
If MacCaughs pilot project is successful, it will be able to build a plant with an NPV of $2 million in 1 years time. Otherwise the pilot investment will be valueless. If the discount rate is 20% and the chances of success are 50%, how much can MacCaugh afford to spend on the pilot project?
A. $1 million.
B. $2 million.
C. $1.667 million.
D. $833,333.
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
12th Edition
0357442156, 978-0357442159
