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Problem 2. The first cost (FC), life (n), and annual benefits (A) for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic (PS) estimates are given. The salvage value is 20% of the first cost. If the interest rate is 25%, what is the mean value of NPW? Parameter First cost Annual benefit Salvage value Project life in years Pessimistic $150,000 $50,000 $30,000 5 Answer: The mean value of NPW is. Most likely $100,000 $45,000 $20,000 7 Optimistic $80,000 $40,000 $16,000 10

Problem 2. The first cost (FC), life (n), and annual benefits (A) for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic (PS) estimates are given. The salvage value is 20% of the first cost. If the interest rate is 25%, what is the mean value of NPW? Parameter First cost Annual benefit Salvage value Project life in years Pessimistic $150,000 $50,000 $30,000 5 Answer: The mean value of NPW is. Most likely $100,000 $45,000 $20,000 7 Optimistic $80,000 $40,000 $16,000 10

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Problem 2. The first cost (FC), life (n), and annual benefits (A) for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic (PS) estimates are given. The salvage value is 20% of the first cost. If the interest rate is 25%, what is the mean value of NPW? Parameter First cost Annual benefit Salvage value Project life in years Pessimistic $150,000 $50,000 $30,000 5 Answer: The mean value of NPW is Most likely $100,000 $45,000 $20,000 7 Optimistic $80,000 $40,000 $16,000 10
Transcribed Image Text:Problem 2. The first cost (FC), life (n), and annual benefits (A) for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic (PS) estimates are given. The salvage value is 20% of the first cost. If the interest rate is 25%, what is the mean value of NPW? Parameter First cost Annual benefit Salvage value Project life in years Pessimistic $150,000 $50,000 $30,000 5 Answer: The mean value of NPW is Most likely $100,000 $45,000 $20,000 7 Optimistic $80,000 $40,000 $16,000 10
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