You were askel to chinate the ex Pec ted Cests af cs You were asked to a,New Pro

Question

You were askel to chinate the ex Pec ted Cests af cs You were asked to a,New Proiect. There are multiplePtiens, a The Costep the building and eq iftnenf, depends deisons that, haveet, to be madc Gizek nowever, under Stand nsK analysis metkoc orestimahung csts, So you Com pile the fellowin n ForMatione tre aret e optins to Pur c hage a bidis: Lay There a wo Options hase a building and sma - A) Yan believe thee is a 75% chance that the larg buidiL,o00,ous) will be Parchasd You, believe there is a 25% chance that-thus bui ldins(l, Ogoo) wilbe Purchased IF the smallbu ing is Pur c hased, there iS on ly ond Alternative For the mackin and this cest3490 f the larg beild ing is Purchastd jhere are opins au are Ahe E llowing dis tritution for Pro ba bi lity,and cestfer which mac hine will eventua ty hy Purcha sea o% for the machine costing ooju 10% for the machine axtin 700,000. alcu lae the Excted atal laves twed nves tne w a

Explanation / Answer

BUILDING OPTION -1 OPTION -2 LONG BUILDING - 75% SMALL BUILDING - 25% Option 1 has 4 options (A) Cost (B) Percentage © Amount (Cost*Percentage) (D) Commulative Cost (D*75%) Cost 100000 Option 1 400000 40% 160000 120000 Option 2 500000 30% 150000 112500 Cost 100000*25% 25000 Option 3 600000 20% 120000 90000 Option4 700000 10% 70000 52500 Total Cost 375000 FINAL COST= SMALL BUILDING + LONG BUILDING 375000+25000 $400000

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