Question: Determine the expected rate of return E ( R ) for the combination of Projects C and D. A. 5% B. 10% C. 13,5% D.

Determine the expected rate of return E ( R ) for

Determine the expected rate of return E ( R ) for the combination of Projects C and D.

A. 5%

B. 10%

C. 13,5%

D. None of the above

Economic Probability of Occurrence Rate of Return if State Occurs D AB A AC AD State 0.10 -10% 30% 20 0.20 o Very poor Poor Average Good Very good 10 10 20 -25% -5 15 35 55 0.40 0.20 0.10 1.00 15% 10 O 25 35 10% -17.5% 10 -2.5 10 12.5 10 27.5 10 42.5 2.5% 5.0 5.0 22.5 32.5 O 30 -10 Expected rate of return Standard deviation 10.0% 11.0% 10.0% 11.0% 15.0% 21.9% 12.0% 12.1% 10.0% 12.5% 0.0% 16.4% 11.0% 10.1%

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