8. Consider a proposed project for capital budgeting. Your company estimates that the project's NPV...
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8. Consider a proposed project for capital budgeting. Your company estimates that the project's NPV is $5 million. This estimate assumes that the economy and market conditions will be average over the next few years. The CFO, however, forecasts that there is only a 40% chance that the economy will be average. Performed the following scenario analysis: Probability of Economic Scenario Outcome NPV Recession 0.05 ($25 million) Below Average 0.25 (10 million) Average 0.40 5 million Above Average 0.25 8 million Boom 0.05 20 million What is the project's expected NPV (in millions)
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