The Estimated Cash Flows of an Investment Project Are Shown

Essay

The estimated cash flows of an investment project are shown below. $$\begin{array} { | l | l | l | l | } \hline \text { Item } & \text { Optimistic } & \text { Most likely } & \text { Pessimistic } \\\hline \text { Initial investment } \$ & 745,000 & 750,000 & 755,000 \\\hline \text { Net annual revenue, } \$ / y e a r & 81,500 & 80,000 & 79,500 \\\hline \text { Market value, } \$ & 39,500 & 38,000 & 37,000 \\\hline \text { Project life, years } & 7 & 7 & 7 \\\hline\end{array}$$ Using a MARR of 14% per year, determine the AW for each of the three estimation conditions.