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I came across question on NPV. there were cashflows for 3 years with attached probabilities and a discount factor. do I need to consider the expected values or else I’ve to just discount the cashflows to get the NPV?
thank you.The normal approach would be to work out the expected values of the cash flows then discount that.
Note that the company would not be guaranteed to achieve the calculated NPV for a once-off project because ‘expected value’ is not usually expected. Any of the predicted cash flows could occur.
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