An automated machine costs $1,000 and has a 20% probability of breaking irreparably at the end...

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An automated machine costs $1,000 and has a 20% probability ofbreaking irreparably at the end of each year (assuming it wasworking in the previous year). The machine has a maximum five-yearlife and will be disposed of with zero value at the end of fiveyears. The machine produces $400 of cashflow at the end of eachyear and the discount rate is 10% per year. What is the most likelynumber of years the machine will last and what would the machinesvalue be?
What is the expected number of years the machine will last andwhat would the value of themachine be? What is the NPV of themachine?

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An automated machine costs $1,000 and has a 20% probability ofbreaking irreparably at the end of each year (assuming it wasworking in the previous year). The machine has a maximum five-yearlife and will be disposed of with zero value at the end of fiveyears. The machine produces $400 of cashflow at the end of eachyear and the discount rate is 10% per year. What is the most likelynumber of years the machine will last and what would the machinesvalue be?What is the expected number of years the machine will last andwhat would the value of themachine be? What is the NPV of themachine?