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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
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. Year 1 Cash Inflow Probability 65 0.40 80 0.20 95 0.40 Year 5 Cash Inflow Probability 50 0.35 80 0.30 110 0.35 Year 10 Cash Inflow Probability 40 0.30 80 0.40 120 0.30 The expected value for all three years is $80. a. Compute the standard deviation for each of the three years. (Round the final answers to 2 decimal places.) Year 1 Standard deviation 13.42 25.10 30.99 Year 5 Year 10 b. This part of the question is not part of your Connect assignment. c. Assuming a 7 percent and 14 percent discount rate, complete the table for present value factors. (Round the final answers to 3 decimal places.) Year PVIE 7 Percent 0.935 PVIF 14 Percent 0.877 Difference 0.058 1 5 10 d. This part of the question is not part of your Connect assignment. b. This part of the question is not part of your Connect assignment. c. Assuming a 7 percent and 14 percent discount rate, complete the table for present value factors. (Round the final answers to 3 decimal places.) Year 1 PVIE 7 Percent 0.935 PVIF 14 Percent 0.877 Difference 0.058 5 10 d. This part of the question is not part of your Connect assignment. e-1. Assume the initial investment is $155. What is the net present value of the expected values of $80 for the investment at a 14 percent discount rate?(Round "PV Factor" to 3 decimal places. Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to 1 decimal place.) Net present value $ e-2. Should the investment be accepted? O No O Yes
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