Should bd co invest in this particular project

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BD Co Ltd is considering investing in a project in Egypt. Initial estimates of the returns of the project have revealed the following figures:

PROBABILITY        RETURNS

10%                    25%

50%                   30%

35%                  20%

5%                    -10%

Problem 1: The current risk-free rate of return in the market is 5.5%. BD Co board of directors has decided that infrastructure projects are risky in general and as such a risk premium of 7% is required. Should BD Co invest in this particular project? Why or why not? Explain your answer.

Reference no: EM132961024

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