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Question #8 McDonald Group is considering a capital budgeting project in Saudi Arabia. The project...

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Question #8 McDonald Group is considering a capital budgeting project in Saudi Arabia. The project requires an initial outlay of 1 million Saudian riyal; the riyal is currently valued at $.50. In the first second and third years of operation, the project will generate 14.00,000 riyals in each year. After 3 years, McDonald Group will terminate the project, and the expected salvage value is 500,000 riyals. McDonald Group has assigned a discount rate of 12 percent to this project. The following additional information is available: There is currently no withholding tax on remittances to the U.S., but there is a 30 percent chance that the Saudian government will impose a withholding tax of 20 percent beginning next year. There is a 40 percent chance that the Saudian government will pay McDonald Group 200,000 riyal after 3 years instead of the 500,000 riyal it expects. The value of the riyal is expected to remain unchanged over the next 3 years. Requirement: Determine the joint probability of each scenario

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