AID10424: XYZ is considering a Project with an initial investment of Rs.100,000. Three probable cash flow scenarios with their probabilities of occurrence are as under:

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Question: XYZ is considering a Project with an initial investment of Rs.100,000. Three probable cash flow scenarios with their probabilities of occurrence are as under:

Annual Cash Flow

(Rs.) 20,000

30,000

40,000

Probability

0.1

0.7

0.2

Project life is 5 years with expected return of 20%. The expected terminal values associated with each of above probabilities are Rs.0, Rs.20,000& Rs.30,000. Find the probable NPV.


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