Optimistic about the success of one project

Reference no: EM13995741

Your boss has asked you to work up a simulation model to examine the uncertainty re- garding the success or failure of five different investment projects. He provides probabil- ities for the success of each project individually: p1 = 0.50, p2 = 0.35, p3 = 0.65, p4 = 0.58, p5 = 0.45. Because the projects are run by different people in different seg ments of the investment market, you both agree that it is reasonable to believe that, given these probabilities, the outcomes of the projects are independent. He points out, however, that he really is not fully confident in these probabilities and that he could be off by as much as 0.05 in either direction on any given probability.

a. How can you incorporate his uncertainty about the probabilities into your simulation?

b. Now suppose he says that if he is optimistic about the success of one project, he is likely to be optimistic about the others as well. For your simulation, this means that if one of the probabilities increases, the others also are likely to increase. How might you incorporate this information into your simulation?

Reference no: EM13995741

Questions Cloud

According to the equation of exchange : According to the equation of exchange, if total output is 2,000 units, the velocity of money is 5, and the money supply is $1,000, the average price per transaction will be

Describe some of the personal and psychological factors : Describe some of the personal and psychological factors that may influence what consumers buy and when they buy it. Identify the ways in which business-to-business (B2B) markets differ from business-to-consumer (B2C) markets. cite sources

The consumption possibilities curve generally crosses : A nation will generally be able to consume less when it trades because of lost jobs to outsourcing. The consumption possibilities curve generally crosses the production possibilities curve. A nation that decides to specialize and trade is no longer l..

Write about what you like to do in the evenings : Write about what the first thing is that you do after coming back from a short trip - how much will it cost the United States to recover from Hurricane Sandy?

Optimistic about the success of one project : Now suppose he says that if he is optimistic about the success of one project, he is likely to be optimistic about the others as well. For your simulation, this means that if one of the probabilities increases, the others also are likely to increa..

What is the mass of the object : Your strange physics professor builds an unusual scale by hanging an object from a 2.0m long wire attached to the ceiling. He plucks the string just above the object and finds that the pulse take 0.40s to propagate up and down the wire. The mass o..

Situations involve step functions : 1. Simulation is one way to find an expected value for Janet Dawes's problem as diagrammed in Figure 11.3. How could you construct a discrete approximation that would at least provide an approximate expected cost for Supplier 2? 2. What other real..

Determine the minimum magnetic field needed to wire to jump : A 20g 12cm long wire is suspended horizontally between the poles of a horseshoe magnet. Determine the minimum magnetic field needed to wire to jump up and out of the magnet.

How much work does the snake do against friction : A slithering snake travels once around a circle of radius 3.20m. The coefficient of friction between the ground and the snake is 0.25, and the snake's weight is 80.0N. How much work does the snake do against friction?

User Account

All Pages