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A business opportunity that could last up to one year in length is available. This...

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Finance

A business opportunity that could last up to one year in length is available. This opportunity requires a start-up investment of $1 million and a monthly fixed cost of $100,000 if the business is up and running. The business would generate a contribution of $500,000 per month. However, there is a 10% chance in each month that the business will have to close due to government intervention. As business interest rates are currently negligible, you face a cost of capital of 0% per month. Should you accept this business opportunity? Show your work. (limit: 1 page)

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