Question: A company is considering a project with an initial outflow of $7,000 and an expected life of 3 years. The cash flows are shown below

A company is considering a project with an initial outflow of $7,000 and an expected life of 3 years. The cash flows are shown below along with the probability distribution for the cash flows.

Probability Cash Flow

.5 $6,200

.1 7,000

.4 8,100

What is the project's expected annual cash flow?

		$6,890
		$7,090
		$7,010
		$6,740
		$8,050

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