4. Xonics Graphics is evaluating a new technology for its reproduction equipment.

The technology will have a 3-year life and cost $1,000. Its impact on cash flows is subject to risk. Management estimates that there is a 50-50 chance that the technology will either save the company $1,000 in the first year or save it nothing at all. If nothing at all, savings in the last 2 years would be zero. Even worse, in the second year an additional outlay of $300 may be required to convert back to the original process, for the new technology may result in less efficiency