Project A’s data is below:

If there is:                         Expected return        Probability of occurrence

Strong demand              20%                            .20

Normal demand             12%                            .60

Weak demand                3%                              .20

a. What is the expected return for the project?

b. If the required rate of return is 13%, should they proceed with the project? Why?

c. You are analyzing Project B against Project A. Project B has a range of 19, which is considered more risky A or B?

d. Does this mean Project B is automatically eliminated from consideration?