A manufacturing firm is considering a project which has an economic service life of one year with no salvage value. The initial cost for the project is $2,500. There is a 0.18 probability that the year-end revenue is $2,280. There is a 0.62 probability that the year-end revenue is $3,910. There is a 0.2 probability that the year-end revenue is $4,730. If the firm's MARR is 14%, what is the variance of the project?
A manufacturing firm is considering a project which has an economic service life of one year with no salvage value. The initial cost for the project is $2,500. There is a 0.18 probability that the year-end revenue is $2,280. There is a 0.62 probability that the year-end revenue is $3,910. There is a 0.2 probability that the year-end revenue is $4,730. If the firm's MARR is 14%, what is the variance of the project?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 2MC
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A manufacturing firm is considering a project which has an economic service life of one year with no salvage value. The initial cost for the project is $2,500. There is a 0.18 probability that the year-end revenue is $2,280. There is a 0.62 probability that the year-end revenue is $3,910. There is a 0.2 probability that the year-end revenue is $4,730. If the firm's MARR is 14%, what is the variance of the project?
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