Question: A Project Manager is working on a mass transit system's commercial feasibility and has calculated expected returns in each possible scenario of the system's usage

A Project Manager is working on a mass transit system's commercial feasibility and has calculated expected returns in each possible scenario of the system's usage by commuters as mentioned below. However, when looking at the forecasted weather pattern of the area over the 10 years life of the project, he now expects that the mass transit system will probably be used heavily for five years, moderately for three years and lightly for two years. Whereas, the expected total revenue over the complete lifetime in each scenario is mentioned below.

ScenarioRevenue (US$ in Millions)

Heavy Usage$40

Moderate Usage$30

Light usage$20

Calculate the expected value or return from each alternative and the total expected revenue, based on the risk probabilities, in case the weather pattern holds as forecasted.

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