Question: Assignment 12-Cash Flow Estimation and Risk Analysis Back to Assignment Attempts:0 Keep the Highest: 0/3 Aa Aa Shan Co. is considering a four-year project that


Assignment 12-Cash Flow Estimation and Risk Analysis Back to Assignment Attempts:0 Keep the Highest: 0/3 Aa Aa Shan Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash fiows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $20,000 per year, and the worst-case cash flows are projected to be -$1,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and o 25% probability of the project generating the worst-case cash flows. what would be the expected net present value (NPV) of this project if the project's cost of capital is 13%? o $20.371 $13,581 $16,976 $17,825 Shan now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenano cash fiows. If it decides to abandon the project at the end of year 2, the company wfeceive a one-time net cash inflow of4,750 (at the end or year 2). The $4,750 the conpany receives at the end of year 2 is the difference between the cash the company recelves from selling off the project's assets and the -$1,000 cash outflow from operations. Additionalily, if it abandons the project, the company will have no cash flows in years 3 and 4 of the project
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