A new product has been proposed. In terms of after-tax net present values, introducing the new product will require initial outlays of

$600,000 for specialized production facilities and promotional expenses.

Over the lifetime of the product, the after tax net present value of the proceeds could be any ofthe following:

Find the expected net present value.

Transcribed Image Text:

Present Value of Proceeds $1,000,000 400,000 200,000 100,000 Probability .8 .1 .05 .05 1.00