First and third, second can still be simplified.
Answer:
$190 is the answer
minus $5 from $97.50 and add that number to $97.50
This cash flow is a perpetuity. To find the present value of perpetuity, we use the equation of
Pv=C÷r
Pv=39,000÷0.058
Pv=672,413.79
The probability that it doesn't land on 4 would be 3/8. This is because theres a 5/8 chance it lands on 4 so just do the opposite which would be 3/8.
