Year II If Cash inflows in Year I are: 4,000 6,000 Event Cash Proba- Cash Proba- Cash Proba- Inflows bility Inflows bility Inflows bility " t t (1) 8,000 10,000 20,000 2 (ii) 10,000 15,000 .8 30,000 .6 (iii) 12,000 20,000 a 40,000 2 Using 10% as the cost of capital, advise about the acceptability of the proposal and present the situation in a decision tree. [Answer: NPV-t 8,587. Proposal be accepted.] (9.11) 343 5,000 Year II If Cash inflows in Year I are: 4,000 6,000 Event Cash Proba- Cash Proba- Cash Proba- Inflows bility Inflows bility Inflows bility " t t (1) 8,000 10,000 20,000 2 (ii) 10,000 15,000 .8 30,000 .6 (iii) 12,000 20,000 a 40,000 2 Using 10% as the cost of capital, advise about the acceptability of the proposal and present the situation in a decision tree. [Answer: NPV-t 8,587. Proposal be accepted.] (9.11) 343 5,000 11. Mr. Bore is considering an investment proposal of 10,000. Ir machinery has a useful life of 2 years without any scrap value. The expected returns during the life of the investment are as under: Year I Event (0) (II) (iii) 4,000 5,000 6,000 Cash Inflow () Probability 2 6 2 Doubt