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    Calculating the NPV of a two-period project

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    A two-period project has the following probabilities and cash flows. The discount rate is 7%, and the initial investment is $1,000. How much is the expected NPV of this project?

    Probability Cash Flow
    Period 1: 10/3% 400
    90% 500
    20/3% 700

    Period 2: 5% 300
    5% 500
    90% 700

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    Solution Preview

    Initial Cash Flow=CFo=-$1000
    Expected Cash Flow in Year ...

    Solution Summary

    Solution describes the steps to estimate the NPV of a two period project.