The firm invests $5 million in a one-year project today. There is a single cashflow at time 1.  The firm estimates that there is a 60% chance of realizing $9 million and a 40% chance of realizing $5 million.  What is the expected time 1 cashflow?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
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Chapter11: Capital Budgeting And Risk
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  1. [NPV|weights] The firm invests $5 million in a one-year project today. There is a single cashflow at time 1.  The firm estimates that there is a 60% chance of realizing $9 million and a 40% chance of realizing $5 million.  What is the expected time 1 cashflow?
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