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

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

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Concept explainers

Continuous Probability Distributions

Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.

Normal Distribution

Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!

Question

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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