The Maxwell School

Syracuse University

Syracuse University

Given:

A risky project costs $20 million, which would be paid in year 0

If the project succeeds, it will produce $5 million of benefits every year starting in year 11

If the project fails, it will produce no benefits

The chance of success is 60%

The interest rate is 5%

Determine:

The expected net present value of the project.

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URL: https://wilcoxen.maxwell.insightworks.com/pages/3568.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 12/08/2011

URL: https://wilcoxen.maxwell.insightworks.com/pages/3568.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 12/08/2011