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average A company has to decide which of three mutually exclusive projects to invest in during the next year The directors believe that the success
average A company has to decide which of three mutually exclusive projects to invest in during the next year The directors believe that the success of the projects will vary depending on consumers demand. There is a 20% chance that consumers demand will be above average, a 45% chance that consumers demand will be average and a 35% chance that consumers demand will be below average The NPV for each of the possible outcomes is as follows Customer demand Below average Above average Project 1 700 000 500 000 400 000 Project 2 600 000 400 000 Project 3 A market research company believes it can provide perfect information on potential customer demand in this market Required: Determine the best project out of the three based on expected value number (answer in Namibian dollars) 300 000 300 000 600 000 800 000 Answor
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