Finally the weekend arrived. Friday evening and the CFO had a wonderful dinner at a restaurant. Suddenly a friend interrupted his conversation with his girlfriend. "I'm totally lost and don't know what to do" his friend said. His friend had got a job at LRF that is the umbrella organisation for Swedish farmers and now obviously he was in trouble! He asked his friend to calm down and call him bright and early Saturday morning. At 6:30AM the phone rang..... Yepp, that is what weekends are for the CFO mumbled as he rose up to attend his friend while he looked at his golf equipment with sad eyes. His friend gave him the following input: "We do have a new fertilizer that looks promising. The investment per hectare is 1 000 kr and if the weather is good at 55% chance it would deliver additional harvest of 700kr and if that is delivered the following year promise 60% chance of good weather and then 1 400kr and if not only 100kr. On the other hand if the weather year 1 is bad we will only get 200kr per hectare. If year one is bad we can expect 25% probability of another bad year with 200kr per hectare but if the weather is good 1 500kr. I will meet with the farmers on Monday morning and don't know what to say !" The required rate is 10% and the owners requres 15% return in investment, ROI. Now the CFO held a golf ball all in his hand and had a smile on his face. "Tell your farmers that this is a good deal with +25% expected return and a probability of some 80% that it will be delivered". His friend went silent but after a few seconds he sad: How could you do that math so quickly. The CFO shrugged his shoulders and said: That is the difference between Linnaeus and Lund....... Make the calculations the CFO did
Finally the weekend arrived. Friday evening and the CFO had a wonderful dinner at a restaurant. Suddenly a friend interrupted his conversation with his girlfriend. "I'm totally lost and don't know what to do" his friend said. His friend had got a job at LRF that is the umbrella organisation for Swedish farmers and now obviously he was in trouble! He asked his friend to calm down and call him bright and early Saturday morning. At 6:30AM the phone rang..... Yepp, that is what weekends are for the CFO mumbled as he rose up to attend his friend while he looked at his golf equipment with sad eyes. His friend gave him the following input: "We do have a new fertilizer that looks promising. The investment per hectare is 1 000 kr and if the weather is good at 55% chance it would deliver additional harvest of 700kr and if that is delivered the following year promise 60% chance of good weather and then 1 400kr and if not only 100kr. On the other hand if the weather year 1 is bad we will only get 200kr per hectare. If year one is bad we can expect 25% probability of another bad year with 200kr per hectare but if the weather is good 1 500kr. I will meet with the farmers on Monday morning and don't know what to say !" The required rate is 10% and the owners requres 15% return in investment,
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