Alternative investments project, investor, investing, following

water2012

An investor is considering investing in a venture capital project that will have a large payoff at exit, which is estimated to occur in four years. The investor realizes that the risk of failure is high, given the following estimated probabilities:

Year 1 2 3 4
Failure Probability 0.30 0.28 0.28 0.25

The probability that the project will survive to the end of the fourth year is:


A) 25.00%.

B) 27.22%.

C) 27.75%


Answer is B

Is the probability that the project will FAIL at the end of the 4th year?