Whilst at the Faroes you overheard a heated conversation at a pub. Numbers were all over! It was a discussion about investment at 500 000 in fish cleansing machinery. Now fishing is a tough business and there were three possible outcomes during the first year at 200 000, 400 000, 600 000 and the probability for them were 40%, 20%, and 40% respectively. Then during the following year, the outcome could be either 250 000 or 125 000 at a probability of 60% and 40% respectively. The machinery would only last for two years and it is assumed that the cash flow will be received at the end of each year. You heard that the required rate was 15% for an investment like this.