Principles of Corporate Finance

Decision Trees

960 (.8)

220(.2)

930(.4)

140(.6)

800(.8)

100(.2)

410(.8)

180(.2)

220(.4)

100(.6)

812

456

660

364

148

+150(.6)

710.73

+30(.4)

+100(.6)

403.82

+50(.4)

-150

0

*450

331

or

NPV=444.55

NPV=888.18

NPV=550.00

NPV=184.55

-550

NPV=?

-250

NPV=?

= ( 888. 18 ×. 60 )+ ( 444. 55 ×. 40 )

Turboprop

Piston