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What is the highest probability of a price shock

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John, the CFO of a construction company, is assessing whether his company should be involved in a one-year project. If things went as planned, the project would yield a return of 20%. However, John is anticipating a potential increase in the price of cement, in which case the project will realize a return of only 5%. What is the highest probability of such a price shock that John can tolerate, given that an expected return of at least 15% is required to recommend the project?

Reference no: EM132776014

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