Final answer:
The expected return of equity is $107,413.07M.
Step-by-step explanation:
To calculate the expected return of equity, we need to calculate the weighted average return for each scenario and then multiply it by the probability of each scenario occurring. The formula for the expected return of equity is:
Expected Return of Equity = (Return in Weak Demand * Probability of Weak Demand) + (Return in Expected Demand * Probability of Expected Demand) + (Return in Strong Demand * Probability of Strong Demand)
Let's calculate the expected return of equity:
Expected Return of Equity = ($48,289.49M * 1/3) + ($88,480.40M * 1/3) + ($114,469.36M * 1/3)
Expected Return of Equity = $39,763.16M + $29,493.46M + $38,156.45M
Expected Return of Equity = $107,413.07M