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B&B Co Ltd is considering investing in a project in Sydney. Initial estimates of the returns of the project have revealed the following figures: PROBABILITY
B&B Co Ltd is considering investing in a project in Sydney. Initial estimates of the returns of the project have revealed the following figures: PROBABILITY RETURNS 0.20 -16% 0.10 15% 0.25 35% 0.35 20% The current risk-free rate of return in the market is 8.5%. B&B Co board of directors has decided that infrastructure projects are risky in general and as such a risk premium of 10% is required. Should B&B Co invest in this particular project? Why or why not?
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