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)

-550

NPV=96.12

-250

NPV=117.00

-150

0

*450

331

or

NPV=444.55

NPV=888.18

NPV=550.00

NPV=184.55

550 96. 12

1. 10

710. 73

− =

Turboprop

Piston