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Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two
Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow Probability $50,000 0.2 55,000 70,000 85,000 90,000 0.2 0.2 0.2 0.2 Hillcrest Apartments Yearly Aftertax Cash Inflow Probability $55,000 0.4 60,000 0.2 70,000 0.1 80,000 0.3 a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.) Expected cash flow Windy Acres Hillcrest Apartments $ $
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