Assume that we can estimate a project's cash flows as follows: n 0 2 4 5 Expected Flow E(An) Estimate of Standard Deviation on $0 $10 $15 $20 $25 $30 -$300 $120 $150 $150 $110 $100 NPW = $182.9 In this case, each annual flow can be represented by a random variable with known mean and variance. Further assume complete independence among the cash flows. (a) Find and the variance of this project at i = = 10%. (b) If all cash flows are normally distributed with the given means and variances, what is the probability that the NPW will exceed $200? ↳ It is NOT 59
Assume that we can estimate a project's cash flows as follows: n 0 2 4 5 Expected Flow E(An) Estimate of Standard Deviation on $0 $10 $15 $20 $25 $30 -$300 $120 $150 $150 $110 $100 NPW = $182.9 In this case, each annual flow can be represented by a random variable with known mean and variance. Further assume complete independence among the cash flows. (a) Find and the variance of this project at i = = 10%. (b) If all cash flows are normally distributed with the given means and variances, what is the probability that the NPW will exceed $200? ↳ It is NOT 59
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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