Project expected npv in today dollars

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The firm has a 75% chance if it invests -$1,500 a return of $500 for 7-years, and a 25% chance of returning $25 for 7-years.

Assuming that all cash flows are discounted at 10%, if NPC chooses to wait a year before proceeding, how much will this increase or decrease the project's expected NPV in today's dollars (i.e., at t = 0), relative to the NPV if it proceeds today?

  • $77.23
  • $85.81
  • $95.34
  • $105.94
  • $116.53

Reference no: EM131318056

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