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2. Consider the following probability distribution of returns estimated for a proposed project that involves a new machine: State of the Economy Probability of Occurrence
2. Consider the following probability distribution of returns estimated for a proposed project that involves a new machine: State of the Economy Probability of Occurrence Rate of Return Recession 0.30 -10% Stability 0.50 10.0 Recovery 0.20 30.0 Required a. Evaluate the expected rate of return and risk of this project? b. Assume you have another investment alternative that is expected to generate return of 18% and have a risk of 20%. Which one of these two projects you will prefer to invest in and why
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