QUESTION 33-36 This table provides information on the discrete random project va
ID: 1120170 • Letter: Q
Question
QUESTION 33-36 This table provides information on the discrete random project variables and their probabilities of occurrence irst Cost (P P1= 20,000 P2= 32,000 0.4 0.6 Net annual revenues (AR-AC AR1-AC115,000 AR2-AC2· 25,000 0.7 0.3 Salvage Value (S SV12,000 SV2= 5,000 0.2 0.8 MARR MARRI. MARR2 8% 10% 0.9 0.1 Project Life (N) N1= 5 N2= 10 0.7 0.3 33. What is the expected first cost? a) $26,000 b) $20,000 c) (20,000+32,000)+2 d) 0.4(20,000)+0.6(32,000) e) None of the above answers 34. The method of using the expected values of a project's variables to determine its NPW is known as a) Monte Carlo simulation b) The expected value of the project's NPW c) The NPW of expected values.Explanation / Answer
33. Ans: 0.4(20,000) + 0.6(32,000)
34. Ans: The NPW of expected values
35. Ans: Sensitivity analysis
36. Ans: Monte Carlo simulation