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What is the probability of cash flow two years from today

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Question - A cash flow is expected to be $500.00 (50% probability) or $1,000.00 (50% probability) next year. Assuming the cash flow next year is $500.00, the cash flow the following year is $400.00 (60% probability) or $600.00 (40% probability). Assuming the cash flow next year is $1,000.00, the cash flow the following year is $1,200.00 (80% probability) or $2,000.00 (20%) probability. What is the probability of a $1,200.00 cash flow two years from today?

Reference no: EM133173383

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