Assume a project is expected to produce the following cash flows in each year, each cash flow is independent of one another, each cash flow is gamma distributed, the risk-free rate is 5 % , and the MARR =15% .

(a) Calculate the expected net present value
(b) Calculate the standard deviation of the net present value
(c) Determine the probability that the NPV will be less than 600 .
(d) Determine the probability that the NPV will lie between 800 and 1200 .

Question

Assume a project is expected to produce the following cash flows in each year, each cash flow is independent of one another, each cash flow is gamma distributed, the risk-free rate is  5 % , and the MARR  =15% .

(a) Calculate the expected net present value
(b) Calculate the standard deviation of the net present value
(c) Determine the probability that the NPV will be less than 600 .
(d) Determine the probability that the NPV will lie between 800 and 1200 .

Quizplus · Accepted Answer

The Answer is (a) (a) (b) (c) (d)

(b)

(c)

(d)

Assume a Project Is Expected to Produce the Following Cash