One of two mutually exclusive alternatives must be selected for implementation. Alternative \(\mathrm{A}\) is an equipment purchase; Alternative B is a lease arrangement with annual payments. The characteristics of the two investments are shown in the table below. Use an 8-year planning horizon and a MARR of 15 percent/year.

For the following question, determine an analytical solution:

a. determine the probability that Alternative \(\mathrm{A}\) is the preferred alternative.
For the following questions, determine a simulation solution using @RISK:

b. Using a Latin hypercube simulation with 10,000 iterations, estimate the probability that \(\mathrm{A}\) is the preferred alternative.

c. Using a Monte Carlo simulation with 10,000 iterations, estimate the mean and standard deviation of present worth and the probability of positive present worth.

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Alt. Parameter Mean Std. Dev. Distribution A Initial Cost $13,000 None None A Annual Maintenance $5,000 $500 Normal A Salvage Value $2,000 $800 Normal B End-of-Year Lease Payment $7,500 $750 Normal