EBK ENGINEERING ECONOMY
16th Edition
ISBN: 9780133819014
Author: Koelling
Publisher: YUZU
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Chapter 11, Problem 39FE
To determine
Profitability of the project.
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Calculate the expected flow rate (barrels per day) for each oil well using the estimated probabilities. Estimated Flow, bbl/Day 100 200 300 400 Probability of Flow North well 0.15 0.75 0.10 0.0 East well 0.35 0.15 0.45 0.05
You are considering investing in one of two projects, which have the following returns and probabilities of occurrence:
(a) Compute the mean return for each project.(b) Compute the variance of return for each project.(c) Which project would you prefer, and why?
10) a) What are the probability distributions for the annual benefit and life for the following project? The annual
benefit's most likely value is $7000 with a probability of 60%. There is a 30% probability that it will be $4000, and
the highest value that is likely $9,000. A life of 6 years is twice as likely as a life of 9 years.
b) The project has a first cost of $25,000. The firm uses an interest rate of 8%. Assume that the probability
distributions for annual benefit and life are unrelated or statistically independent. Calculate the probability
distribution for the PW
c) The first cost of the project is $25,000. Use the expected values for annual benefits and life to estimate the present
worth. Use an interest rate of 8%.
d) Use the probability distribution function of the PW to calculate the EV(PW). Does this indicate an attractive
project?
F) Using the probability distribution for the PW, calculate the PW's standard deviation.
Chapter 11 Solutions
EBK ENGINEERING ECONOMY
Ch. 11 - Prob. 1PCh. 11 - Refer to Example 11-2. Assuming gasoline costs...Ch. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - You have decided to purchase a new automobile with...Ch. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - A bridge is to be constructed now as part of a new...Ch. 11 - An aerodynamic three-wheeled automobile (the Dart)...Ch. 11 - Prob. 23PCh. 11 - Prob. 24SECh. 11 - Prob. 25SECh. 11 - Prob. 26SECh. 11 - Prob. 27SECh. 11 - Prob. 28SECh. 11 - Prob. 29SECh. 11 - Prob. 30FECh. 11 - Prob. 31FECh. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - Prob. 34FECh. 11 - Prob. 35FECh. 11 - Prob. 36FECh. 11 - Prob. 37FECh. 11 - Prob. 38FECh. 11 - Prob. 39FECh. 11 - Prob. 40FECh. 11 - Prob. 41FECh. 11 - Prob. 42FE
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