The net present value of a project is normally distributed with an expected value of $52,000 and a standard deviation of $31,515.Determine the probability that the project will have a net present value of less than zero.
A)1.65%
B)95.1%
C)4.95%
D)cannot be determined

Question

Quizplus · Accepted Answer

P(NPV < $0) = P(Z < ($0 - $52,000)/$31,515)
= P(Z < - 1.65) = 4.95% from Table V

The Net Present Value of a Project Is Normally Distributed