Determine the expected present worth of the following cash flow series if each series may be realized with the probability shown at the head of each column. Let i = 20% per year.     The present worth when the probability is 0.4 is $________  .   The present worth when the probability is 0.23 is $________  .   The present worth when the probability is 0.37 is $_________  .   The expected present worth value is $______________  .

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Cash flow series

 

  Annual Cash Flow ($ per year) Annual Cash Flow ($ per year) Annual Cash Flow ($ per year)
Year Prob = 0.4 Prob = 0.23 Prob = 0.37
0 –5000 –6000 –4000
1 1000 500 3500
2 1000 1500 1200
3 1000 2000 100

 

 

Determine the expected present worth of the following cash flow series if each series may be realized with the probability shown at the head of each column. Let i = 20% per year.

 

 

The present worth when the probability is 0.4 is $________  .

 

The present worth when the probability is 0.23 is $________  .

 

The present worth when the probability is 0.37 is $_________  .

 

The expected present worth value is $______________  .

 
 
 
 
 
 
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