I am unsure how to include the salvage value in the PV calculation the answer is 2882 but I got 2811 there is a 71 difference which I believe is due to Salvage Value.

.3*(2100/1.09)+.7*(700/1.09) + .4*(1600/1.09)^2+.6*(600/1.09)^2 + .4(2000/1.09)^3+.6(700/1.09)^3 =2811 my calculations but again the solution is 2882

Please explain the calculation for 2882.

Question below

Snowdon Ltd operates under ideal conditions of uncertainty. On January 1, 2015, Snowdon Ltd acquired an asset to be used in its operations. Its cash flows depend on the demand conditions. The machine will be used for three years, at the end of which its salvage value will be 200. Snowdon Ltd financed the asset purchase by issuing ordinary shares. In 2015, net cash flows will be 2100 if the demand conditions are favourable and 700 if they are unfavourable. In 2016, cash flows will be 1600 if the economic conditions are favourable and 600 if they are unfavourable. In 2017, cash flows will be 2000 if the economic conditions are favourable and 700 if they are unfavourable. Cash flows are received at year-end. In the first and second years, the probability that the economic conditions are favourable is 0.3 and 0.7 that they are unfavourable. In the second and third years, the probability that the economic conditions are favourable is 0.4 and 0.6 that they are unfavourable. The interest rate in the economy is 9% in all three years. Snowdon Ltd pays a dividend of 200 at the end of 2015. In 2015, the demand conditions are favourable. Demand conditions for 2016 and 2017 are not yet known. Prepare a statement of financial position (balance sheet) as at the end of 2015 and a statement of income for 2015.