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You are evaluating an investment that requires a $150 investment today. With a 25% probability, the investment will pay off $800 in one year. With
You are evaluating an investment that requires a $150 investment today. With a 25% probability, the investment will pay off $800 in one year. With 75% probability, the investment pays off $0 in one year. What is the expected cash flow at time 1? What is the internal rate of return (IRR) of the project?
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