Tuesday, 1 October 2019

Consider the graph below. Suppose that the discount factor is 0.80. Assume that cash flows occur at the

Consider the graph below. Suppose that the discount factor is 0.80. Assume that cash flows occur at the beginning of periods. (a) What is the optimal present value for the initial node A? (Keep your answer to 2 decimal places. e.g. xx.12.) (b) Highlight the optimal path in the graph.

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