CFA Level I sample question

CFA Level I Capital Investments and Capital Allocation question

Corporate Issuers / Capital Investments and Capital Allocation

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Capital Investments and Capital Allocation sample question

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Corporate Issuers

Capital Investments and Capital Allocation

Meridian Power can invest in a wind project today with an NPV of 60,000. Alternatively, it can wait one year for a regulatory ruling: with 60% probability the ruling is favorable and the project's NPV at that time will be 200,000; with 40% probability it is unfavorable and the NPV at that time would be -150,000, in which case the company will NOT invest. Using a 10% discount rate, the value of waiting relative to investing today is closest to:

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