2. A safety engineer is evaluating whether to use safety project. The project will cost $250,000 more initially, but it will reduce the safety related costs. The optimistic, most likely, and pessimistic projections for annual savings are $35,000 (probability 0.25), $31,000 (probability 0.5) and $13,000 (with probability 0.25). The annual interest rate is 6%, and the safety project should have a life of 20 years. a. What is the present worth of each estimated value, and associated risk

b.Does the answer (a) match the present value of the most likely value? Why or why not?

A safetyengineer is evaluating whether to use safety project. The project will cost $250,000 more initially, but it will reduce the safety related costs. The optimistic, most likely, and pessimisticprojections for annual savings are $35,000 (probability 0.25 ), $31,000 (probability 0.5) and $13,000 (with probability 0.25 ). The annual interest rate is 6%, and the safety project should have a life of 20 years. a. What is the present worth of each estimated value, and associated risk b. Does the answer (a) match the present value of the most likely value? Why or why not