Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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CVD Ltd needs to choose from three mutually exclusive projects. The net cash flows from the projects will depend on market demand. All of the projects will last for only one year. The forecast net cash flows and their associated probabilities are given below:
Market Demand                  Probability
       Weak                                0.20
     Average                              0.50
     Good                                  0.30


Market Demand                  Project A       Project B        Project C
        Weak                            R450 000      R350 000       R550 000
      Average                          R550 000      R400 000       R500 000
        Good                            R650 000       R450 000       R700 000

Required:
Calculate the expected value of the net cash flows from each of the three projects.

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