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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