Grupo Pao de Acar (GPA) is one of the four largest food retailers in Brazil and the only locally owned one. The value of their assets next year depends upon how the Brazilian economy does. The asset values are expressed in millions of Brazilian Reals. Think of these numbers as the cash into which these assets could be converted. The current risk-free rate is 4.8%. The three states are equally likely (i.e., the probability of each state is 1/3). The cash flows in the following table do not include the NPV of financing. They include only the value of the real or operating assets of GPA.

Low Medium High Expected Growth Growth Growth Asset cash flow 240 420 540 Debt cash flow