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Expected NPV.
ThreeCash makes an investment of $1.000 which has an expected
future cash flow at the end of one period that is subject to risk:
the cash flow at the end
of one period may be $1.000 with a probability of 0.2, or $2.000 with a probability of 0.3,
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Unformatted text preview: or $3.000 with a probability of 0.5. If ThreeCash’s cost of capital is 14%, what is the investment’s expected NPV (expected value of the NPVs, average NPV, mean NPV)? $1.018 ?...
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This note was uploaded on 03/28/2008 for the course FRL 301 taught by Professor Carney during the Spring '08 term at Cal Poly Pomona.
 Spring '08
 CARNEY

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