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5. The Tata Power is evaluating an investment in a project which has a projected after-tax cash inflow generated over the next 3 years as

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5. The Tata Power is evaluating an investment in a project which has a projected after-tax cash inflow generated over the next 3 years as follows: Year 2017 Year 2018 Year 2019 Probability Cash flow (Rs) Probability Cash flow (Rs) Probability Cash flow (Rs) 0.2 70000 0.2 60000 0.3 60000 0.1 80000 0.4 80000 0.4 90000 0.3 40000 0.3 40000 0.1 20000 0.4 60000 0.1 50000 0.2 30000 Assume that probability distributions are independent and the risk free rate of return is 8.4 percent. The expected rate of return on market portfolio is 12 percent and the estimated project beta is 1.5. If the project requires an initial investment of Rs 54000 and 2 the probability distribution of NPV is normal and continuous, what is the probability that NPV will be greater than zero? What is the probability that NPV will be greater than the expected value? Should the project be accepted

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