Question 1 A firm is assessing a project's BTCF for year 3. It has developed three estimates for BTCF in today's dollars, the likely amount, a high amount and a low amount, each with an associated probability. Annual inflation could be low at 3% or high at 8%. The firm estimates low inflation to have a 80% likelihood. BTCF (today's $) Probability Low 150,000 0.3 Most Likely 180,000 0.6 High 200,000 0.1 What is the expected BTCF for year 3 of the project in actual dollars? O $179,920 O $187,117 O $194,819 O $202.843 A firm is assessing a projects BTCF for year 3. It has developed three estimates for BTCF in todays dollars, the likely amount, a high amount, and a low amount, each with an associated probability. Annual inflation could be low at 3% or high at 8%. The firm estimates low inflation to have a 80% likelihood. What is the expected BTCF for year 3 of the project in actual dollars?
Question 1 A firm is assessing a project's BTCF for year 3. It has developed three estimates for BTCF in today's dollars, the likely amount, a high amount and a low amount, each with an associated probability. Annual inflation could be low at 3% or high at 8%. The firm estimates low inflation to have a 80% likelihood. BTCF (today's $) Probability Low 150,000 0.3 Most Likely 180,000 0.6 High 200,000 0.1 What is the expected BTCF for year 3 of the project in actual dollars? O $179,920 O $187,117 O $194,819 O $202.843 A firm is assessing a projects BTCF for year 3. It has developed three estimates for BTCF in todays dollars, the likely amount, a high amount, and a low amount, each with an associated probability. Annual inflation could be low at 3% or high at 8%. The firm estimates low inflation to have a 80% likelihood. What is the expected BTCF for year 3 of the project in actual dollars?
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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Transcribed Image Text:Question 1
A firm is assessing a project's BTCF for year 3. It has developed three estimates for BTCF in today's
dollars, the likely amount, a high amount and a low amount, each with an associated probability.
Annual inflation could be low at 3% or high at 8%. The firm estimates low inflation to have a 80%
likelihood.
BTCF (today's $)
Probability
Low
150,000
0.3
Most Likely
180,000
0.6
High
200,000
0.1
What is the expected BTCF for year 3 of the project tn actual dollars?
O $179,920
O $187,117
O $194,819
$202.843
A firm is assessing a projects BTCF for year 3.
It has developed three estimates for BTCF in
todays dollars, the likely amount, a high
amount, and a low amount, each with an
associated probability. Annual inflation could
be low at 3% or high at 8%. The firm estimates
low inflation to have a 80% likelihood. What is
the expected BTCF for year 3 of the project in
actual dollars?
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