What is the expected value of the activities

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Amazing Ventilators Ltd (hereafter "AV") manufactures ventilators. AV is concerned that the government will expropriate its manufacturing plant. AV believes there is only a risk during the next year of cash flows, but the risk will dissipate thereafter. AV believes there is a 42.1% risk of expropriation in the first year. AV believes that the property will generate cash flows of 3.3 at the end of the next year, growing at a rate of 2.4%. The cost of capital is 8.5. What is the expected value of the activities?

Reference no: EM132509216

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