is up, with An asset is currently expected to pay-off $10,000 per year for the next two years if the economy probability, 30%, and $7,000 per year for the next two years, otherwise. What is the total amount of normal and abnormal earnings next year (after one year from now, just before getting the first payoff) if the economy was up next year, and is expected to stay up for another year with a probability of 40%. The discounting rate is 10%. (a) $3,800 (b) $3,744 (c) $1,371 (d) $1,736

An asset is currently expected to pay-off $10,000 per year for the next two years if the economy is up, with probability, 30%, and $7,000 per year for the next two years, otherwise. What is the total amount of normal and abnormal earnings next year (after one year from now, just before getting the first payoff) if the economy was up next year, and is expected to stay up for another year with a probability of 40%. The discounting rate is 10%. (a) $3,800 (b) $3,744 (c) $1,371 (d) $1,736