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It is now felt that final scrap value of machine depends on 2 factors, whether or not a new supplier enters the market
(which would reduce the likely scrap value) and the strength of the dollar against other currencies( since sales
of used machines will be made abroad and invoiced in foreign currency) . Adverse effects each will reduce the scrap value by 10% of the fig used in investment appraisal. Relevant probabilities are as followsNew supplier Probability Strong $ Probability
Yes 0.4 yes 0.3
No 0.6 no 0.7What is now expected value of scrap proceeds from machine 2?
a)$106800
b)$109000
C)$111600
d)$113000Correct ans is C Sir please can you explain
It is impossible for me to explain, because you have not typed out all of the information. You have not said what the scrap proceeds are!!
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