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

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Assume that we can estimate a project's cash flows as follows:
n
0
1
2
3
4
5
Expected Flow E(An) Estimate of Standard Deviation on
SO
$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
Transcribed Image Text:Assume that we can estimate a project's cash flows as follows: n 0 1 2 3 4 5 Expected Flow E(An) Estimate of Standard Deviation on SO $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
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