ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A project has a life of 10 years and no salvage value. Your firm uses an MARR of 8% to evaluate projects. The project has
uncertain costs and revenue as shown in the table below: Initial Cost Probability Net Revenue Probability $120,000 0.25 $
32,000 0.15 $230,000 0.60 $45,000 0.55 $330,000 0.15 $55,000 0.30 Determine the risk for the project expressed as the
standard deviation of the expected value of the EUAW. Express your answer in $ to the nearest $100.
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Transcribed Image Text:A project has a life of 10 years and no salvage value. Your firm uses an MARR of 8% to evaluate projects. The project has uncertain costs and revenue as shown in the table below: Initial Cost Probability Net Revenue Probability $120,000 0.25 $ 32,000 0.15 $230,000 0.60 $45,000 0.55 $330,000 0.15 $55,000 0.30 Determine the risk for the project expressed as the standard deviation of the expected value of the EUAW. Express your answer in $ to the nearest $100.
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