A risky $500,000 investment is expected to generate the following cash flows: $$\begin{array} { l c c c }
\text { Year } & 1 & 2 & 3 \
& \$ 250,000 & \$ 266,667 & \$ 285,715 .
\end{array}$$
The probability of receiving each cash inflow is 80, 75, and 70 percent, respectively. If the firm's cost of capital is 10 percent, should the investment be made?

Question

A risky $500,000 investment is expected to generate the following cash flows:​ $$\begin{array} { l c c c } 
\text { Year } & 1 & 2 & 3 \
& \$ 250,000 & \$ 266,667 & \$ 285,715 .
\end{array}$$ ​
The probability of receiving each cash inflow is 80, 75, and 70 percent, respectively. If the firm's cost of capital is 10 percent, should the investment be made?

Quizplus · Accepted Answer

The Answer of A risky $500,000 investment is expected to generate the following cash flows:​ $$\begin{array} { l c c c } 
\text { Year } & 1 & 2 & 3 \
& \$ 250,000 & \$ 266,667 & \$ 285,715 .
\end{array}$$ ​
The probability of receiving each cash inflow is 80, 75, and 70 percent, respectively. If the firm's cost of capital is 10 percent, should the investment be made?

A Risky $500,000 Investment Is Expected to Generate the Following Year 123$250,000$266,667$285,715.\begin{array} { l c c c } \text { Year } & 1 & 2 & 3 \\& \$ 250,000 & \$ 266,667 & \$ 285,715 .\end{array} Year ​1$250,000​2$266,667​3$285,715.​

A Risky $500,000 Investment Is Expected to Generate the Following $\begin{array} { l c c c } \text { Year } & 1 & 2 & 3 \\& \$ 250,000 & \$ 266,667 & \$ 285,715 .\end{array}$