Q6. (10%) Figure below shows the mean values of the cash flows associated with some investment. The initial investment is known and is not a random variable. The other cash flows are independent random variables with Normal distributions. In each case the standard deviation of the cash flow is one quarter of the mean value (o .25p). Compute the mean and standard deviation of the NPW of the cash flow. Accept or reject the investment based on the expected value. Compute the probability that this investment yields a returm greater than the MARR. The MARR is 10%. $1.000 S800 $600 $400 $200 Year $2,000

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Q6. (10%) Figure below shows the mean values of the cash flows associated with some
investment. The initial investment is known and is not a random variable. The other cash flows
are independent random variables with Normal distributions. In each case the standard deviation
of the cash flow is one quarter of the mean value (o=.25µ). Compute the mean and standard
deviation of the NPW of the cash flow. Accept or reject the investment based on the expected
value. Compute the probability that this investment yields a return greater than the MARR. The
MARR is 10%.
$1.000
S800
$600
$400
$200
Year
2.
3.
$2,000
Transcribed Image Text:Q6. (10%) Figure below shows the mean values of the cash flows associated with some investment. The initial investment is known and is not a random variable. The other cash flows are independent random variables with Normal distributions. In each case the standard deviation of the cash flow is one quarter of the mean value (o=.25µ). Compute the mean and standard deviation of the NPW of the cash flow. Accept or reject the investment based on the expected value. Compute the probability that this investment yields a return greater than the MARR. The MARR is 10%. $1.000 S800 $600 $400 $200 Year 2. 3. $2,000
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