First Interstate Bank is considering a capital project request to build a branch bank in the...
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First Interstate Bank is considering a capital project request to build a branch bank in the southwestern section of the city. The branch bank will occupy 6,000 square feet of floor space, and the cost estimating parameter is $86 per square foot. The useful life of the branch bank is five years before a major renovation will be needed. Estimated range of cash inflows for years 1 and 2 is $72,000, $65,000, and $47,000. Each value in this range has assigned probabilities of occurrence of .3, .5, and .2, respectively. For years 3 and 4, the estimated range of cash inflows is $295,000, $182,000, and $67,000 with assigned probabilities of occurrence of .2, .7, and .1, respectively. For year 5, the estimated range of cash inflows is $90,000, $70,000, and $40,000 with assigned probabilities of .2, .6, and .2, respectively. Estimated Investment? $ Estimated Cash In-flows Year 1 Year 2 Year 3 Year 4 First Interstate Bank is considering a capital project request to build a branch bank in the southwestern section of the city. The branch bank will occupy 6,000 square feet of floor space, and the cost estimating parameter is $86 per square foot. The useful life of the branch bank is five years before a major renovation will be needed. Estimated range of cash inflows for years 1 and 2 is $72,000, $65,000, and $47,000. Each value in this range has assigned probabilities of occurrence of .3, .5, and .2, respectively. For years 3 and 4, the estimated range of cash inflows is $295,000, $182,000, and $67,000 with assigned probabilities of occurrence of .2, .7, and .1, respectively. For year 5, the estimated range of cash inflows is $90,000, $70,000, and $40,000 with assigned probabilities of .2, .6, and .2, respectively. Estimated Investment? $ Estimated Cash In-flows Year 1 Year 2 Year 3 Year 4
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