ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Engineering Econ HW8 Q2

2. A project has a life of 10 years, and no salvage value. The firm uses an interest rate of 12% to
evaluate engineering projects. The project has an uncertain first cost and net revenue. What is
the joint probability distribution for first cost and net revenue?
Probability
0.2
First Cost
$300,000
$400,000
0.5
$600,000
0.3
Net Revenue
$70,000
Probability
0.3
$90,000
0.5
$100,000
0.2
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Transcribed Image Text:2. A project has a life of 10 years, and no salvage value. The firm uses an interest rate of 12% to evaluate engineering projects. The project has an uncertain first cost and net revenue. What is the joint probability distribution for first cost and net revenue? Probability 0.2 First Cost $300,000 $400,000 0.5 $600,000 0.3 Net Revenue $70,000 Probability 0.3 $90,000 0.5 $100,000 0.2
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