25. Homewood Electronics sells major appliances on a two-year payment plan. The company would like to estimate the bad debt allowance needed to cover the notes outstanding over the next two years. Uncollected notes range from $5,000 to $8,000 per year. Total sales revenue for 2015 amounted to $100,000. Estimated lost cash flows and the probability of occurrence for each of the next two years are summarized in the following schedule. The risk-free rate is 5%. What is the estimated bad debt allowance for 2015?

Total 2016 expected cash flow loss on notes outstanding - 2,720

Total 2017 expected cash flow loss on notes outstanding - 3,565

Group of answer choices

5,824

6,285

5.986

5,701