A proposed project has the following cash flow estimates:

Assuming independent cash flows, a normally distributed net present value, and a minimum attractive rate of return of 15 percent, determine the following.
For the following questions, determine an analytical solution:

a. The mean and standard deviation of net present value

b. The probability that the net present value is negative

c. The probability that the net present value is greater than \(\$ 1,000,000\)
For the following questions, determine a simulation solution using @RISK:
Assume the initial investment and annual receipts are normally distributed.

d. Using a Latin hypercube simulation with 10,000 iterations, estimate the probability that the present worth is negative.

e. Using a Monte Carlo simulation with 10,000 iterations, estimate the probability that the present worth is negative.

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End of Year Mean Net Cash Flow Standard Deviation of Cash Flow 0 -$800,000 $250,000 1 $1,000,000 $450,000 2 $1,000,000 $600,000