单选题
An initial investment of $1 million in a venture capital project is expected to pay $10 million at the end of 5 years if it is successful. The probabilities of failure for the project are provided in the table below:
| Year: | 1 | 2 | 3 | 4 | 5 |
| Failure Probability | 0.30 | 0.25 | 0.20 | 0.20 | 0.20 |
If the cost of capital for the project is 18%, the project's expected NPV is closest to:
【正确答案】
B
【答案解析】
B is correct because you calculate the probability of success as (1-0.30) × (1-0.25) × (1-0.20) × (1-0.20) × (1-0.20)=.2688.Then calculate the NPV from success