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Herman Co. is considering a four-year project that will require an initial investment of $7,000. The base-case cash flows for this project are projected to
Herman Co. is considering a four-year project that will require an initial investment of $7,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be S 22,000 per year, and the worst-case cash flows are projected to be-$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and a 25% probability of the project generating the worst-case cash flows. What would be the expected net present value (NPV) of this project if the project's cost of capital is 10%? O $37,973 O $33,020 $31,369 $26,416
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