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Question 2 (1 point) A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic
Question 2 (1 point) A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm's cost of capital is 10 percent Project A Initial Investment Annual Cash Inflow Outcome Pessimistic Most likely ,000 $5,000 10,000 5,000 timisti ect B Initial Investment Annual Cash Inflow $20,000 40,000 100,000 Outcome Pessimistic Most likely $100,000 timistic The expected net present value of Project A if the outcomes are equally probable and the project has five-year life is . (See Table above) 1) -$1,045 2) $17,910 3) $36,865 4) $93,730
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