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Question

You are the CEO and your finance department has given you several scenarios for a big project.

Scenario

Description & Likelihood

Return on investment

Scenario 1

Best Case/Everything goes perfect:                               10% chance

+50%

Scenario 2

Positive Case/Somewhat better than expected:        20% chance

+20%

Scenario 3

Base Case/Everything goes as expected :                     35% chance

+10%

Scenario 4

Negative Case/Somewhat worse than expected:       20% chance

-20%

Scenario 5

Worst Case/Unmitigated disaster:                                 15% chance

-50%

What is the expected return on investment of this project?

10.0%

  5.0%

  1.0%

  0.0%

-1.0%

Scenario

Description & Likelihood

Return on investment

Scenario 1

Best Case/Everything goes perfect:                               10% chance

+50%

Scenario 2

Positive Case/Somewhat better than expected:        20% chance

+20%

Scenario 3

Base Case/Everything goes as expected :                     35% chance

+10%

Scenario 4

Negative Case/Somewhat worse than expected:       20% chance

-20%

Scenario 5

Worst Case/Unmitigated disaster:                                 15% chance

-50%

 

Solution
5 (1 Ratings )

Solved
Finance 1 Month Ago 4 Views
This Question has Been Answered!
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