ABC Limited wants to use a decision tree in evaluating a venture Capital investment in the Cable Industry. The projected investment has a life of three years, and the associated after-tax cash flows ($000) and probabilities are as follows:

Year 1 Year 2 Year 3 Cash Flow: $200 P=0.50 If cash flow in year 1 =$200 If cash Flow in year 2 = $150 $300 P=0.50 Year 2 cash flow =$150 P=0.60 Year 3 $400 P= 0.70, $350 P=0.30 $90 P=0.40 Year 2 $90, Year 4 $150 P=0.60 or $85 If cash flow in year 1 is $300 P=0.40 Year 2 cash flow $350 P=0.50, $250 P=0.50 If cash flow in year 2 is $350 Year 3 $500 (P=0.80) or $300 (P=0.20) If cash Flow in year 2 is $250, year 3 $160 (P=0.40) $150 (P=0.60)