Part of EOM2 asks us the following:
Under which future scenarios would you recommend the investment and under which would you walk away?
I understand that the investment should be made iff the expected return is greater than or equal to the required return.
We are able to estimate ranges for the required return under each scenario using the formula/model given in the exercise and considering the impact of external forces.
But now my questions is how can we determine the expected return under each scenario? I really confused on this part as I don't think we are given any guidance on it, or any information that would allow us to calculate it.
Am I missing something?
Any help/comments would be greatly appreciated!
Under which future scenarios would you recommend the investment and under which would you walk away?
I understand that the investment should be made iff the expected return is greater than or equal to the required return.
We are able to estimate ranges for the required return under each scenario using the formula/model given in the exercise and considering the impact of external forces.
But now my questions is how can we determine the expected return under each scenario? I really confused on this part as I don't think we are given any guidance on it, or any information that would allow us to calculate it.
Am I missing something?
Any help/comments would be greatly appreciated!
EOM2: required return vs. expected return