Question
Your firm is trying to forecast its net income for 2020, but it is uncertain about the potential risks. The firm does know the following
Your firm is trying to forecast its net income for 2020, but it is uncertain about the potential risks. The firm does know the following probabilities of potential net incomes, though. What is the firm's expected net income based on the information below?
| State of the Firm | Probability | Predicted Net Income |
|---|---|---|
| Booming Performance | 50% | $3,000,000 |
| Average Performance | 10% | $1,500,000 |
| Below Average Performance | 10% | $800,000 |
| Poor Performance | 30% | -$450,000 |
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Basic Finance An Introduction To Financial Institutions Investments And Management
Authors: Herbert B. Mayo, Michael J Lavelle
13th Edition
0357714741, 978-0357714744
