Suppose an investor has an opportunity to invest $3 million in a venture investment that is expected to pay $30 million at the end of 4 years if it survives. The cost of capital for a project with this risk level is 30%. However, the project may not survive the full 4 years and has an expected failure rate shown in the probability table shown below. The likelihood of failure in the first year is 25% , with the likelihood of failure in the second year being 20% ( assuming it survives the first year) and so on.（）
A．20%
B．45.9%
C．25%
参考答案：B
解析：
The probability of the project surviving is a function of the combined probabilities of each year. Consequently, the probability of survival for the first year is ( 1 - 0.25 ) = 75%. The likelihood of survival the second year based on the probability of failure the first year is ( 1 - 0.25 ) × ( 1 -0.20) = 60%. Under this methodology given the probability table provided, the likelihood of surviving the full four years is: (1 -0.25) × (1 -0.20) × (1 -0.15) × (1 -0.10) =45.9%.