Exercise 6-20 For each of the following, determine the expected cash flows. (Rou

Question

Exercise 6-20

For each of the following, determine the expected cash flows. (Round answers to 0 decimal places, e.g. 5,845. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Cash Flow

Probability

Expected

Estimate

Assessment

Cash Flow

Cash Flow

Probability

Expected

Estimate

Assessment

Cash Flow

(a) $5,010 20 % $

6,490 50 %

7,630 30 %

Total Expected Value $

(b) $5,410 30 % $

7,560 60 %

8,710 10 %

Total Expected Value $

(c) $(1,140 ) 10 % $

3,240 80 %

5,130 10 %

Total Expected Value $

Explanation / Answer

Calculate following :

Cash flow estimated Probability assessment expected cash flow a. 5010 20% 1002 6490 50% 3245 7630 30% 2289 Total Expected Value 6536 b 5410 30% 1623 7560 60% 4536 8710 10% 871 Total expected value 7030 c (1140) 10% (114) 3240 80% 2592 5130 10% 513 Total expected value 2991

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