Mistake in Schweser Alternative investments? investment, first, cross, reference, expected

clearlycanadian

Alternative Investments study section 18.... cross reference to cfa book reading #73

page 267 number 11.

An investor makes a $1 million investment in a venture capital project that has an expected payoff of $5 million at the end of 4 years. The cost of capital is 10%. If the conditional annual failure probabilities over the first 4 years are 10%, 15%, 20%, and 15%, the expected NPV of the project is closest to:

a. $366, 067
b. $775, 834
c. $698, 057

I get $1,300,821.92. The answer is b.

BTW, is there a place where Schweser posts the errata?

There's an example to a similar question to this one on page 254-255.



Edited 2 time(s). Last edit at Saturday, April 3, 2010 at 10:27PM by homie.