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The Brewing Company is considering a capital project with a one-year life and the following possible rates of returns which are dependent on the state
The Brewing Company is considering a capital project with a one-year life and the following possible rates of returns which are dependent on the state of the economy. The estimated rates of return are shown in the last column:
Given these probabilities and possible rates of return, the expected rate of return on the capital project is____ %. (Fill in the blank with your calculation result of two decimal places).
State of the Economy Probability of Each State Occurring Rates of Return if State Occurs
Boom .40 24%
Normal .40 10%
Recession .20 -12%
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