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A research project would require initial investment of 90,000. There are three possible outcomes for this project: 1) 30% probability that investment yields annual income
A research project would require initial investment of 90,000. There are three possible outcomes for this project: 1) 30% probability that investment yields annual income of 35,000 for six year (starting from year 1 to year six) and zero salvage value 2) 50% probability that investment yields annual income of 25,000 for six year (starting from year 1 to year six) and zero salvage value 3) 20% probability of failure that yields zero annual income but salvage value of 65,000 dollar at the end of year 1 Calculate expected Rate of Return for this investment. Explain your work in detail including all the required equations and calculations
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