Question: Simulation problem A plant manager is considering investing in a new $35,000 machine. Use of the new machine is expected to generate a cash flow

Simulation problem

A plant manager is considering investing in a new $35,000 machine. Use of the new machine is expected to generate a cash flow of about $8,000 per year for each of the next 5 years. However, the cash flow is uncertain, and the manager estimates that the actual cash flow will be normally distributed with a mean of $8,000 and a standard deviation of $500. The discount rate is set at 8% and assumed to remain constant over the next 5 years. The company evaluates capital investments using net present value. How risky is this investment? Develop an appropriate simulation model (with 300 trails) and conduct experiments and statistical output analysis to answer this question.

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