Solution-What is the certainty equivalent npv for this

What is the certainty equivalent npv for this project

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Reference no: EM13517850

Billy Bob is considering building a water slide park that will require a net investment of $200,000 and yield the following net cash flows:
Year Net Cash Flows Cert. Equiv. Factor
1 $120,000 .90
2 90,000 .80
3 60,000 .65
4 30,000 .50
5 10,000 .30
If the risk-free rate is 8 percent and the market risk premium is 6 percent, what is the certainty equivalent NPV for this project?

a. $ 5,746
b. $11,025
c. $ 3,703
d. $12,805

Reference no: EM13517850

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What is the certainty equivalent npv for this project

Reference no: EM13517850

Reference no: EM13517850

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