Firm X Is Considering a Project and Its Analysts Have

question 85

Multiple Choice

Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. $$\begin{array} { c c l } \text { Outcome } & \text { Probability of Outcome } & \text { Assumptions } \\\$ 4,600 & 30 \% & \text { pessimistic } \\\$ 7,800 & 45 \% & \text { moderately successful } \\\$ 13,500 & 25 \% & \text { optimistic }\end{array}$$ What is the expected value of the outcomes?

• A)$3,123
• B)$8,633
• C)$8,265
• D)Cannot be determined.Depends upon which prediction is correct.