Hand written requirement don't use excel file 1. Naughty Pine Lumber Company is evaluating a new saw with a life of two years. The sawcosts $3,000, and future after-tax cash flows depend on demand for the company's pro-ducts. The tabular illustration of a probability tree of possible future cash flows associatedwith the new saw is as follows:YEAR IYEAR 2CONDITIONALPROBABILITYP(2 | 1)INITIALNETNETPROBABILITYP(1)CASHFLOWCASHFLOWBRANCH$1,0001,5002,0000.300.40$1,5000.4020.3031.000.402,00042,5003,0000.602,5000.400.201.006.1.00a. What are the joint probabilities of occurrence of the various branches?b. If the risk-free rate is 10 percent, what is (i) the net present value of each of the six com-plete branches, and (ii) the expected value and standard deviation of the probabilitydistribution of possible net present values?c. Assuming a normal distribution, what is the probability that the actual net presentvalue will be less than zero? What is the significance of this probability?

Name: Hand written requirement don't use excel file 1. Naughty Pine Lumber C
Uploaded: 2024-03-20T07:07:26.000Z
Channel: Bartleby
Description: Hand written requirement don't use excel file 1. Naughty Pine Lumber Company is evaluating a new saw with a life of two years. The sawcosts $3,000, and future after-tax cash flows depend on demand for the company's pro-ducts. The tabular illustration