UESTIONS 31 to 32 The economic viability of a specific project depends on its de
ID: 2797564 • Letter: U
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UESTIONS 31 to 32 The economic viability of a specific project depends on its deterministic and random variables. Project managers are convinced that the three following project parameters are known with complete certainty MARR= 10% . Life-10 years · The four project variables are 1. Initial cost (three possible values as shown in the following table) 2. Annual revenues (four possible values as shown in the following table) 3. Annual cost (three possible values as shown in the following table) 4. Salvage value (two possible values as shown in the following table) Initial Cost (S) AnalAnnual Salvage Value Revenues $10,000 $15,000 $20,000 $25,000 Cost $4,000 $6,000 $8,000 $5,000 $6, 000 $7.000 $2,000 $3,000 The 10th simulation of a project's NPW is calculated from a combination of deterministic and random variables. If the random number associated with the annual revenue variable for this simulation were 0.6, the calculation of the NPW would be based on annual revenues of a) $10,000 b) $15,000 c) $20,000 d) $25,000 31. 32. The 50th simulation of the project's NPW is also calculated from a combination of deterministic and random variables. If the random number associated with the salvage value variable were 0.8, the calculation of the NPW would be based on a salvage value of a) $2,000 b) $3,000Explanation / Answer
31) Lets divide the random variables from 0-1 to the annual revenues so each should get 0.25 numbers for the revenue class.So the class for random no. associated with revenue will be as
So each revenue stream has 25 random no associated with it.
Since 0.6 comes in simulation, the annual revenue it will be associated with is
c) $20,000
32.) Same as above but distribution will be 0.5-0.5
Since 0.8 comes in simulation it is associated with b.) $3,000
Random Numbers Annual Revenue 0-0.25 $10000 0.26-0.50 $15000 0.50-0.75 $20000 0.76-1.00 $25000Related Questions
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