Question: The Grand Design Corporation uses the certainty equivalent approach in making capital budgeting decisions. You are given the following data for a particular project The

The Grand Design Corporation uses the certainty equivalent approach in making capital budgeting decisions. You are given the following data for a particular project

The risk-free discount rate is I percent, and the RADR is 12 percent. Calculate the NPV. Would you accept this project?

Year 1 Year 2 Probability Cash Flow lity Cash Flow 0.1 0.4 0.4 0.1 $700 600 500 400 0.2 0.3 0.3 0.2 600 500 100 300

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