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MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Q. 1 Suppose that we are considering the investment project which requires an initial investment outflow of $345. Given a resulting cash flows of $600, $300 and -$150 in year 1. In year 2, each branch will produce three possible outcomes as shown in the table below. The risk-free rate of return is 7.5%. Calculate the Expected Net Present Value (NPV), Variance and Standard Deviation of this investment project by using probability tree approach. YEAR 1 YEAR 2 Initial Net Cash Conditional Net Cash Flow Branch Probability P(1) Probability P (2/1) 0.20 Flow $700 $200 $500 1 0.30 $600 0.40 2 0.40 3 0.30 -$100 4 $300 $300 $500 0.50 0.30 5 0.40 6 0.30 -$400 7 0.20 0.50 0.20 -$150 -$100 $200 9
Transcribed Image Text:Q. 1 Suppose that we are considering the investment project which requires an initial investment outflow of $345. Given a resulting cash flows of $600, $300 and -$150 in year 1. In year 2, each branch will produce three possible outcomes as shown in the table below. The risk-free rate of return is 7.5%. Calculate the Expected Net Present Value (NPV), Variance and Standard Deviation of this investment project by using probability tree approach. YEAR 1 YEAR 2 Initial Net Cash Conditional Net Cash Flow Branch Probability P(1) Probability P (2/1) 0.20 Flow $700 $200 $500 1 0.30 $600 0.40 2 0.40 3 0.30 -$100 4 $300 $300 $500 0.50 0.30 5 0.40 6 0.30 -$400 7 0.20 0.50 0.20 -$150 -$100 $200 9
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