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  3. a project has an initial cash outflow of $2500. th

A project has an initial cash outflow of $2500. The project has 3 years of...

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Finance

A project has an initial cash outflow of $2500. The project has 3 years of life. The project has a medium risk profile with cost of capital of 8%. Estimates suggest that the certainty equivalent cash inflows for the project are 80% of the expected cash flows. The expected annual cash flows are $1200, $1000, and $1100. If the risk free rate is 5%, what is the equivalent certainty estimate of the NPV for the project? (step by step)

a. $100 (approx.)

b. Can not be determined

c. $120 (approx.)

d. - $100 (approx.)

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