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Q1- A project requires an immediate cash outflow of 300 million in return for the following probable cash flows: Year 1 State of Economy Year
Q1- A project requires an immediate cash outflow of 300 million in return for the following probable cash flows: Year 1 State of Economy Year 2 Probability of State of Economy in million in million 0.2 800 130 Recession Growth 0.5 300 350 Boom 0.3 900 440 Assume that the state of economy will be the same in the second year as in the first. The required rate of return is 7%. There is no tax or inflation. Required: a- Calculate the expected NPV b- Calculate the standard deviation of NPV
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