Solution-What is the project expected NPV

What is the project expected NPV

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Question - Heywood Diagnostic Enterprises is evaluating a project with the following net cash flows and probabilities (Prob)

Year	Prob. = 0.2	Prob. = 0.6	Prob. = 0.2
0	$100,000	$100,000	$100,000
1	20,000	30,000	40,000
2	20,000	30,000	40,000
3	20,000	30,000	30,000
4	20,000	30,000	40,000
5	20,000	40,000	50,000

The year 5 values include salvage value. Heywood's corporate cost of capital is 10 percent.

Required -

a. What is the project's expected (i.e. base case) NPV assuming average risk?

b. What are the project's most likely, worst-case, and best-case NPVs?

Reference no: EM132807056

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What is the project expected NPV

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Reference no: EM132807056

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