Two mutually exclusive alternatives are being compared. The planning horizon is 10 years, and MARR is 12 percent. The cash flows for the alternatives are shown in the table below. All cash flows are normally distributed.

For the following questions, determine a simulation solution using @RISK:

a. Using a Latin hypercube simulation with 10,000 iterations, determine the mean and standard deviation of the present worth of each alternative.

b. Using a Latin hypercube simulation with 10,000 iterations, determine the probability that Alternative 1 is preferred over Alternative 2.

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Alternative 1 Alternative 2 Initial Investment Standard Deviation Initial Investment Standard Deviation $750,000 15,000 $750,000 150,000 Salvage Value Standard Deviation Salvage Value Standard Deviation $125,000 2,500 $125,000 25,000 Annual Revenue Standard Deviation Annual Revenue Standard Deviation $75,000 1,500 $75,000 15,000