Question: Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. OUTCOME PROBABILITY ASSUMPTIONS $5,250 25% Pessimistic $7,800 45%

Firm X is considering a project and its analysts have projected the following outcomes and their probabilities.

OUTCOME

PROBABILITY

ASSUMPTIONS

$5,250

25%

Pessimistic

$7,800

45%

Moderately successful

$13,500

30%

optimistic

What is the expected value of the outcomes?

A. $3,123

B. $8,460

C. $8,873

D. Cannot be determined/depends upon which prediction is correct

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