Question
The basalt Corporation is considering a new venture. Management has made the following cash flow estimates for the project over the next three years under
The basalt Corporation is considering a new venture. Management has made the following cash flow estimates for the project over the next three years under assumptions reflecting best, worst, in most likely scenarios in each year. The expected initial outlay is (CO) $1000 in the cost of capital is 12%. The following probability distribution for best, worst, and most likely conditions is constant from year-to-year . Worst-case C1= $200, C2 = $300, C3 =$400. Most likely C1 =$300, C2=$400, C3=$500. Best case C1= $400, C2=$500, C3=$600 Best case 25% most likely case 50% worst case 25% . Calculate the NPV's of the overall best, most likely, in the worst case scenario's in the probability of each. Done
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