Shao Industries is considering a proposed project for its capital budget. The companyestimates the project's NPV is $12 million. This estimate assumes that the economy andmarket conditions will be average over the next few years. The company's CFO, however,forecasts there is only a 50% chance that the economy will be average. Recognizing thisuncertainty, she has also performed the following scenario analysis:

Economic ScenarioProbabilityNPV (millions)

Recession 0.05 ($60)

Below average 0.2 ($25)

Average 0.5 $12

Above average 0.2 $20

Boom 0.05 $30