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Question 3: [30 marks] The Caribou Pipeline Company projects a pattern of inflows from the investment shown in the following table. The inflows are spread
Question 3: [30 marks] The Caribou Pipeline Company projects a pattern of inflows from the investment shown in the following table. The inflows are spread over time to reflect delayed benefits. Each year is independent of the others. The expected value for all three years is $80. Year 1 Year 5 Year 10 Cash inflow Probability Cash inflow Probability Cash inflow Probability 65 .20 50 .25 40 .30 80 60 80 .50 80 .40 95 20 110 25 120 .30
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