Net After-Tax Cash Flows

Year P = 0.2 P = 0.6 P = 0.2

0 $100,000 $100,000 $100,000

1 20,000 30,000 40,000

2 20,000 30,000 40,000

3 20,000 30,000 40,000

4 20,000 30,000 40,000

5 20,000 30,000 40,000

5* 0 20,000 30,000

4. Assume that the project has average risk. Find the projects expected NPV. (Hint: Use expected values for the net cash flow in each year.)