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The blazzinggame corporation is considering a three year project that has an initial cash outlay (Co) of $175,000 and three cash inflows that are

The blazzinggame corporation is considering a three year project that has an initial cash outlay (Co) of $175,000 and three cash inflows that are defined by the following independent probability distrubutions. All dollars figures are in thousands, blazzingame cost of capital is 10%. C1: $50, $60, $70 Probabilty. 25 

C2: $40, $80, $120  probability . 50 

C3: $75, $80, $85: proablity .25     the questions are A: estimate the projects most likely NPV using a point estimate of each cash flow. what is the probability.

B What are the best and worst possible NPV's? what are the probablities? 

c. Choose a few outcome random, calculate their NPV and associated probability and sketch the probability distrubution of the project NPV





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Although the problem asks for only a few outcomes, we'll list them all and identify the best, worst, and most likely. First... View the full answer

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PS3s_W07.doc

Although the problem asks for only a few outcomes, we'll list them all and identify the
best, worst, and most likely. First restate the matrix of outcomes by multiplying each
Ci by PVF10,i and...

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