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A company is considering a project involving the outlay of 200,000 which it estimates will generate cash flows over its 2 year life span at
A company is considering a project involving the outlay of 200,000 which it estimates will generate cash flows over its 2 year life span at the probabilities shown in the following tables:
Cash flow project Year 1
Cash Flow () | Probability |
200,000 | 0.6 |
300,000 | 0.4 |
Cash flow project Year 2
If the cash flow in Year 1 is: () | There is a probability of: | That the cash flow in Year 2 will be: () |
200,000 | 0.1 | 0 |
0.5 | 100,000 | |
0.4 | 200,000 | |
300,000 | 0.4 | 100,000 |
0.3 | 200,000 | |
0.3 | 250,000 |
What is the probability that the total cashflow will be 400,000?
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