To value an asset using the expected present value technique, an entity uses (case data) three possible annual cash flows: 250,000 with a probability of 25 %, 420,000 with 45 % and 700,000 with 30 %. Compute the expected cash flow, before discounting.
- Low cash flow
- 250,000
- Probability of the low cash flow
- 25 %
- Intermediate cash flow
- 420,000
- Probability of the intermediate cash flow
- 45 %
- High cash flow
- 700,000
- Probability of the high cash flow
- 30 %