Considering project called container

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kramerica industries is considering a project called container 2 that has an up front cost of $300,000. the project's subsequent cash flows are critically dependent on whether another of its products, Container 1 becomes a sales hit. There is a 45% chance that container 1 will become a sales hit, in which case container 2's expected cash flows will be $190,000 at the end of each of the next 3 years. There is a 55% chance that container 1 will not become a sales success, in which case container 2's expected cash flows will be $40,000 at the end of each of the next 3 years. assume that the cost of capital is 10%.

Reference no: EM132007506

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