Question
You have collected the following information: State Probability Cash Flow in 4 years Good 0.75 1000 Bad 0.25 -1000 Investors have a 10% cost of
You have collected the following information:
| State | Probability | Cash Flow in 4 years |
| Good | 0.75 | 1000 |
| Bad | 0.25 | -1000 |
Investors have a 10% cost of capital with annual compounding.
Based on this information what is the present value of the expected cash flow?
| Less than $300 | |||||||||||||||||||||||
| Between $300 and $350 | |||||||||||||||||||||||
| Between $350 and $400 | |||||||||||||||||||||||
| More than $400 You have collected the following information:
Investors have a 10% cost of capital with annual compounding. Based on this information what is the present value of the expected cash flow?
|
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
