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Calculate the expected return of the new project

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Question - Steel Robotics is considering a new investment in Brazil. Initial estimates of the investment returns have revealed the following: Probability Return 10.00% -12.00% 40.00% 20.00% 30.00% 35.00% 20.00% 37.00%

The company's board of directors has determined that the project requires a risk premium of 18% per annum. The risk-free rate is 5.5% per annum and the company has a beta coefficient of 1.0. Using the information provided in the table above, calculate the expected return of the new project and conclude if the project should or should not be undertaken.

Reference no: EM132986828

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