Present worth of the expected values of annual benefit

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Reference no: EM131537326

We are uncertain about the project. The annual profit has two outcomes, a gain $500 or a loss $(-100). The probability of a loss is 0.3. The useful life has two outcomes: either 5 or 2 years, each with probability 0.5. The life and the benefit are independent. What is the present worth of the expected values of annual benefit and useful life? discount rate 5%

Reference no: EM131537326

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