Larry's Athletic Lounge is considering an expansion program to increase the sophistication of the exercise equipment. The equipment will cost $20,000 and has an estimated life of five years. Larry is not sure how many members the new equipment will attract, but he estimates that his increased annual cash flows for each of the next five years will have the following probability distribution. Larry's cost of capital is 14 percent. Probability Cash flow .2 $2,400 .4 4,800 .3 6,000 .1 7,200 a. What is the expected cash flow? b. What are the expected NPV and IRR? c. Should Larry buy the new equipment?