Question: Consider a project whose annual benefit must likely value is $8,000 with probability 60%. There is a 30% probability that it will be $5,000. The
Consider a project whose annual benefit must likely value is $8,000 with probability 60%. There is a 30% probability that it will be $5,000. The highest likely value is $10,000. Additionally, it has been estimated that a life of 6 years for that project is twice as likely as a life of 9 years. The initial cost of the project is $25,000, the analysis interest rate is 10%, and annual benefit and life have unrelated probability distributions. Answer the following questions: What is the probability for the life of that project to be 6 years? What is the probability for the life of that project to be 9 years? What is the present worth of the project if the life is 9 years and annual benefit $8.000K? What is the probability of the project to have a life of 9 years and annual benefit of $8,000K? [Choose] [Choose] [Choose] O [Choose]
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