ajpheif16

ans is b.

-1 Mill investment

5/1.1^4 -> payoff from the project. But this is only in the case project succeeds.

Probability of success of project = 0.9*.85*.8*.85=0.5202

So NPV=0.5202*5/1.1^4 - 1 = 0.776518...

closest to b.

CP