3. A construction company considers that a project to save energy would provide some savings. They...
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3. A construction company considers that a project to save energy would provide some savings. They consider that the most likely savings value per month will be $10,000. The optimistic saving value is estimated at $60,000 per month with a probability of 25%, and the pessimistic estimate per month is 20% less of the most likely value with a probability of 35%. The useful life in years for the project is 10 years with a probability of 30% and 7 years with the remaining probability. a) Determine the joint probability distribution for savings per year and the useful life. b) Based on the joint probability determine the expected savings value, per year. Consider a monthly interest rate of 1% 3. A construction company considers that a project to save energy would provide some savings. They consider that the most likely savings value per month will be $10,000. The optimistic saving value is estimated at $60,000 per month with a probability of 25%, and the pessimistic estimate per month is 20% less of the most likely value with a probability of 35%. The useful life in years for the project is 10 years with a probability of 30% and 7 years with the remaining probability. a) Determine the joint probability distribution for savings per year and the useful life. b) Based on the joint probability determine the expected savings value, per year. Consider a monthly interest rate of 1%
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Determining Savings and Expected Value a Joint Probability Distribution Savings per Month Probabilit... View the full answer
Related Book For
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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