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Calculate the company enpv

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A machine costs $25,000. It has a 2-year life and a 12% discount rate correctly reflects its risk. Its performance depends upon the state of the world:

State Year1 Year2 Probability

I +20000 +15000 60%

II +12,000 +18000 20%

III +10,000 +20000 20%

The company can sell the machine at the end of Year 1 for $15,000. At the end of Year 2 the machine will be worthless.

Calculate the company's ENPV.

Reference no: EM133233657

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