Financial Management: 12-7 Shao Industries is considering a proposed project

Financial Management
12-7 Scenario Analysis
Shao Industries is considering a proposed project for its capital budget. The company estimates the project’s NPV is $12million. This estimate assumes that the economy and market conditions will be average over the next few years. The company’s CFO, however, forecasts there is only a 50% chance the economy will be average.
Recognizing this uncertainty, she has aloes performed the following scenario analysis:
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