investment
A proposed investment of $18,000 will have revenue of $8,000. The investment risk is based on the life of the investment. The estimate of probabilities for the duration of the investment is given below.
Year, n Probability
3 0.1
4 0.4
5 0.3
6 0.2
No matter what the life of the investment might be, there will be no salvage value. A MARR of 15 % may be used for the analysis. (MARR= Minimum Acceptable Rate of Return)