Reference no: EM132746297

Problem 1: Given the following cash flows and certainty equivalent (C-E) factors for an investment project, determine the certainty-equivalent net present value. The firm's cost of capital is 14 percent and the risk-free rate is 6 percent.

Year        Cash Flow            C-E Factor
0            -$100,000              1.00
1             70,000                 0.90
2             70,000                 0.75
3            70,000                  0.55

Group of answer choices

A) $46,723

B) $52,544

C) $38,484

D) $27,645

E) $18,764