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52 Consider the following: State of the Economy Probability of that State Go Forward's expected return in that State Bad 0.2 -5% Average 0.5 15%

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52 Consider the following: State of the Economy Probability of that State Go Forward's expected return in that State Bad 0.2 -5% Average 0.5 15% Good 0.3 25% What is the overall expected return for Go Forward Corp? a. 11.7% b. 14.0 C. 15 d. 16.0 e. Insufficient information to compute. 53 Your firm is analyzing whether a project currently engaged in should be continued or abandoned. Which of the following is true regarding this question? a. Continue the project if the total nominal (literal dollar, i.e. no discounting) sum of all expected future cash flows exceeds the current abandonment value. b. Continue the project if the total NPV of all expected future cash flows exceeds the current abandonment value. c. Abandon the project if the total NPV of all expected future cash flows is LESS than the current abandonment value. d. Both b&c e. All of the above

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