Question
Problem 22-16 A risky $20,000 investment is expected to generate the following cash flows: Year 1 $ 18,375 Year 2 $ 21,000 Year 3 $
Problem 22-16 A risky $20,000 investment is expected to generate the following cash flows:
Year 1 $ 18,375
Year 2 $ 21,000
Year 3 $ 24,500
The probability of receiving each cash inflow is 80, 70, and 60 percent, respectively. If the firms cost of capital is 10 percent, should the investment be made? Use Appendix D to answer the question. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar.
NPV:
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Project Financing Asset-Based Financial Engineering
Authors: John D Finnerty
3rd Edition
1118421841, 9781118421840
