To compute the value in use of a bottling line, Valtera uses three scenarios for the net cash flow it will receive in one year: 80,000 (probability 20 %), 100,000 (probability 50 %) and 120,000 (probability 30 %). The discount rate provided, 2 %, contains no adjustment for the risks already reflected in the weighting of the scenarios. Compute the expected cash flow, then its present value.
- Low-scenario cash flow
- 80,000
- Probability of the low scenario
- 20 %
- Central-scenario cash flow
- 100,000
- Probability of the central scenario
- 50 %
- High-scenario cash flow
- 120,000
- Probability of the high scenario
- 30 %
- Discount rate provided
- 2 %