Hi,

I'm doing an assignment about making a cash budget for a mineral exploration company. It said that there would be 30% chance of getting an economic value of $30m. --- With no month of sale specified.

Should I put the number into a cash budget? And if yes, 3*30m or 30m?

And if it's OK, may I know the topic related for further study please?

Thank you

$30m sounds about right but you will need much more detail to do a cash budget as all that number can do is provide you with the total value of one item in the cash flow.

What you do is provide scenarios, which in this case are probably time related

.30% chance isn't much of a chance really, big risk there


Topic

Capital Project Evaluation
Merchant Banking
Risk Management