ly explain properly
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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Kindly explain properly

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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