FBS 210 Revision

Far Side Limited is considering two possible capital projects for 2005. Each project has a life of one year and project returns are dependent on the state of the economy next year. The estimated rates of return are as follows: State of the Probability Rates of return economy A B Recession 25% 2% 0% Average 50% 14% 13% Boom ?% 18% 18% Required: Calculate in which project Far Side Limited must invest