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%u2022b. Because of the risk inherent in this type of investment, Seminole has decided to employ the certainty equivalent approach. After considerable discussion, management has
%u2022b. Because of the risk inherent in this type of investment, Seminole has decided to employ the certainty equivalent approach. After considerable discussion, management has agreed to apply the following certainty equivalents to the project%u2019s cash flows: Year at 0 1.00 1 0.95 2 0.90 3 0.80 4 0.60 5 0.40 6 0.35 7 0.30 If the risk-free rate is 9 percent, compute the project%u2019s certainty equivalent net present value. c. On the basis of the certainty equivalent analysis, should the project be accepted?
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