Find expected present value of these uncertain cash flows

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Reference no: EM131965916

A project with a 3-year life has the following probability distributions for possible end-of-year cash flows in each of the next three years?

Year 1

Prob 0.30 Cash Flow $300

Prob 0.40 Cash Flow $500

Prob 0.30 Cash Flow $700

Year 2

Prob 0.15 Cash Flow $100

Prob 0.35 Cash Flow $200

Prob 0.35 Cash Flow $600

Year 2

Prob 0.25 Cash Flow $200

Prob 0.75 Cash Flow $800

Prob 0.15 Cash Flow $900

Using an interest rate of 8 percent, find the expected present value of these uncertain cash flows.

(Hint:Find the expected cash flow in each year, then evaluate those cash flows.)

a.$1,204.95

b.$835.42

c.$1,519.21

d.$1,580.00

e.$1,347.61

Would like to see calculator solution please.

Reference no: EM131965916

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