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Ca final - sfm - practice manual - capital budgeting chapter
I have a query in SFM - Practice Manual(Jan 2015 edition) - Capital Budgeting Chapter - Q. No. 36 - Pg. No. 2.59
I am not understanding (B) part answer of this Q. From where they bring 1900,900,100 amt. I am not understanding it please help
thank you in adavance
Replies (1)
So when you will draw decision tree for 1 to 3 year your net cash flow in different option will be (5500-4600)=900, (6500-4600)=1900, (4500-4600)=-100.
Basically it is net cashflow on each leg with 0.125 probability.
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