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MNB2601-25-S1
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Suppose an organisation invests R5 000 in a project at an interest rate of 16%, compounded annually. How much will the project be worth after 12 years?
Consider the information given below to answer the question that follows.
MFM Manufacturers is considering making an investment in a business improvement project with the following probability and expected rate of return:
The probability and expected rate of return of the MFM Manufacturers' business improvement project
State of the economy
|
Probability
|
Project return
|
Extraordinary boom
|
35%
|
40%
|
Boom
|
25%
|
30%
|
Normal
|
20%
|
20%
|
Recession
|
15%
|
-10%
|
Depression
|
5%
|
-15%
|
|
100%
|
|
The expected rate of return on this project is