Solve with steps Answer = 10-16 A robot has just been installed at a cost of $81
ID: 2764768 • Letter: S
Question
Solve with steps Answer =10-16 A robot has just been installed at a cost of $81,000 A It will have no salvage value at the end of its useful life. Savings per Yoar Probability Lifo lyeprs Probability $18,000 20,000 22,000 Useful 25,M 0.2 0.7 0.1 12 1/6 2/3 1/6 4 (a) What is the joint probability distribution for savings per year and useful life? (b) Define optimistic, most likely, and pessimistic scenarios by using both optimistic, both most likely, and both pessimistic estimates. What is the rate of return for each scenario?
Explanation / Answer
Answer for question no.a:
Answer for question no.b:
Both optimistic situation is estimating best result in both cases i.e., savings of $22,000 for 12 years
Both most likely situation is expecting moderate in both cases i.e., earning $20,000 for 5 years
Both pesimistice situation is expecting worst results from both savings angle and year of service,i.e., generating a cash flow of $18,000 for only 4 years.
Combination Joint probability Calculation savings of 18000 and life of 12 years 0.033 0.2*0.16666667 Savings of 18000 and life of 5 years 0.133 0.2*666666667 savings of 18000 and life of 4 years 0.033 0.2*0.16666667 Savings of 20000 and life of 12 years 0.117 0.7*0.16666667 Savings of 20000 and life of 5 years 0.467 0.7*666666667 Savings of 20000 and life of 4 years 0.012 0.7*0.16666667 Savings of 22000 and life of 12 years 0.017 0.1*0.16666667 Savings of 22000 and life of 5 years 0.067 0.1*666666667 Savings of 22000 and life of 4 years 0.017 0.1*0.16666667