Larry Corporation is considering a project with a life of two years and an initial cash outflow of $10,000. The WACC of the company is 11.25%. The probability distribution of cash inflow for the first year of the project is given below:

Economic Condition of the Industry	Probability	Estimate Cash inflow
Good	70%	$9,000
Bad	30%	$3,000

If the expected cash flow in the first year becomes $9,000, the probability distribution of cash inflow in the second year is given in the table below:

Economic Condition of the Industry	Probability	Estimate Cash inflow in (000)
Good	60%	$8,000
Bad	40%	$4,000

If the expected cash flow in the first year becomes $3,000, the probability distribution of cash inflow in the second year is given below:

Economic Condition of the Industry	Probability	Estimate Cash inflow in (000)
Good	20%	$7,000
Bad	80%	$3,500

What is the expected NPV of this project? Is the project accepted? Please explain.

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