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SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?

SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter19: The Basic Tools Of Finance
Section: Chapter Questions
Problem 3CQQ
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SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?
Transcribed Image Text:SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?
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