A plant manager is considering investing in a new $30,000 machine. Use of the new machine is

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A plant manager is considering investing in a new $30,000 machine. Use of the new machine is expected to generate a cash flow of about $8,000 per year for each of the next five years. However, the cash flow is uncertain, and the manager estimates that the actual cash flow will be normally distributed with a mean of $8,000 and a standard deviation of $500. The discount rate is set at 8% and assumed to remain constant over the next five years. The company evaluates capital investments using NPV. How risky is this investment? Develop an appropriate simulation model and conduct experiments and statistical output analysis to answer this question. Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
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