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KBR Corporation is considering an investment project that generates a cash flow of $1,650,000 next year if the economy is favorable but generates only $500,000

KBR Corporation is considering an investment project that generates a cash flow of $1,650,000 next year if the economy is favorable but generates only $500,000 if the economy is unfavorable. The probability of favorable economy is 60% and of unfavorable economy is 30%. The project will last only one year and be closed after that. The cost of investment is $1,200,000 and KBR plans to finance the project with $400,000 of equity and $800,000 of debt. Assuming the discount rates of both equity and debt are 0%. What is the expected cash flow to KBR s shareholders if the company invests in the project?

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