Principles of Corporate Finance

(Barry) #1

Unbiased Forecast


w Given three outcomes and their related
probabilities and cash flows we can determine
an unbiased forecast of cash flows.

0.8 .25 .2


1.0 .50 .5 $1.0 million


1.2 .25 .3


forecast


Unbiased
cash flow
Probability Prob weighted
cash flow


Possible

Free download pdf