A company has to decide which of three mutually exclusive projects to invest in next...
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Accounting
A company has to decide which of three mutually exclusive projects to invest in next year. The directors believe that the success of the projects will vary depending on economic conditions. There is a 30 per cent chance that conditions will be good, a 20 per cent chance that conditions will be fair and a 50 per cent chance that conditions will be poor.The company uses expected value to make this type of decision.
The net present value for each of the possible outcomes is as follows:
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You can see the logs in the Dashboard.