Mathematics, 23.04.2021 16:30 dominiqueallen23

You are considering a project in Bolivia that would generate 3 million dollars in cash flows per year going forever. The cost of the project is 10 million dollars. The discount rate for the project is 15%. You believe that there is some probability of expropriation prior to the 3rd year (after the 2nd cash flow). Which of the following statements is most correct? a. This is a good project if the probability of expropriation is larger than.33.
b. This is a good project if the probability of expropriation is smaller than.33.
c. This is a good project if the probability of expropriation is smaller than .
d. This is a good project if the probability of expropriation is smaller than .66.

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