Question: Suppose there are two projects (A and B) and the project cash flows are given below: State of Economy Probability of Cash Flow Project Cash

 Suppose there are two projects (A and B) and the project

Suppose there are two projects (A and B) and the project cash flows are given below: State of Economy Probability of Cash Flow Project Cash Flow Project Outcome A B Strong 0.20 700 550 Normal 0.50 400 400 Weak 0.30 200 300 a) Calculate i) the return for project A and project B. (4 marks) ii) the risk and return for project A and project B. (8 marks) b) Decide on which project would you select. State your reasons

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