Q$.$ No$.4$:

PQR Ltd is considering a proposal

Initial investment $-40000$

Life $2$ years

$\frac{2}{4}$

Required rate of return$/$ discounting factor $-10\%$

Cash flow in year $2$ is affected by cash flow in year $1$

Other details

Evaluate the proposal

a$)$ Construct a decision tree

b$)$ What is the worst outcome? And what is the probability of the occurrence of worst outcome.

c$)$ What is the best outcome? And what is the probability of the occurrence of best outcome.

d$)$ Will the project be accepted?