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Heywood Diagnostic Enterprises is evaluating a project with the following net cash flows and probabilities:
Year Prob = 0.2 Prob = 0.6 Prob = 0.2
0 (100,000) (100,000) (100,000)
1 20,000 30,000 40,000
2 20,000 30,000 40,000
4 20,000 30,000 40,000
5 30,000 40,000 50,000
a. What is the project’s expected NPV assuming average risk?
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