Question
ABC company plans to make an investment of 750,000 TL with an economic life of 4 years. There is partial dependence (moderate dependency) between the
ABC company plans to make an investment of 750,000 TL with an economic life of 4 years.
There is partial dependence (moderate dependency) between the cash flows expected from the investment. The risk-free interest rate is 5%. The cash flows of the company for the 1st and 2nd years are 200.000 TL with 100% probability. 3. Cash flows for the year are 70.000 TL with 40% probability and 100,000 TL with 60% probability. Cash flows for the 4th year are 200.000 with 20% probability, 150.000 TL with 50% probability and 100,000 TL with 30% probability, in case of 40% probability.
In case of 60% probability, it is 100,000 TL with 30% probability, 150,000 TL with 30% probability, and 120,000 TL with 40% probability. Calculate the net present value and standard deviation of the project by drawing the decision tree suitable for this situation.
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