Philippine Airlines (PAL) plans to offer several new electronic services on flights between Manila and selected Asian destinations. The marketing director estimates that for a typical 24-hour period there is a 55% chance of having a net cash flow of P40,000 and a 25% chance of P95,000. He also estimates there is a small 5% chance of no cash flow and a 15% chance of a loss of P16,000, which is the estimated extra personnel and utility costs to offer the services. Determine the expected net cash flow.
Philippine Airlines (PAL) plans to offer several new electronic services on flights between Manila and selected Asian destinations. The marketing director estimates that for a typical 24-hour period there is a 55% chance of having a net cash flow of P40,000 and a 25% chance of P95,000. He also estimates there is a small 5% chance of no cash flow and a 15% chance of a loss of P16,000, which is the estimated extra personnel and utility costs to offer the services. Determine the expected net cash flow.
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
Section: Chapter Questions
Problem 1PS
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Philippine Airlines (PAL) plans to offer several new electronic services on flights between Manila and selected Asian destinations. The marketing director estimates that for a typical 24-hour period there is a 55% chance of having a net cash flow of P40,000 and a 25% chance of P95,000. He also estimates there is a small 5% chance of no cash flow and a 15% chance of a loss of P16,000, which is the estimated extra personnel and utility costs to offer the services. Determine the expected net cash flow.
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