2) The first cost, life, and annual benefit for a prospective...

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2) The first cost, life, and annual benefit for a prospective project are uncertain. Optimistic, most likely, and pessimistic estimates are given. If the interest rate is 20%, what is the expected NPV? First Cost Probability Annual Benefit Probability Project Life Probability Pessimistic 150,000 10% 25,000 33.3% 5 20% Most likely 100,000 60% 45,000 66.7% Optimistic 80,000 30% 50.000 8 20 50% 30%

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