Standard deviation of the present worth

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Reference no: EM131562065

A project under consideration is expected to have an 5-7 year projected life (equal probabilities for 5, 6, and 7 years). The initial investment for the project is estimated to be normally distributed with a mean of $20,000 and a standard deviation of $500. The salvage value at the end of the project life is estimated at 10% of the initial investment. The annual revenue estimates are more certain and estimated at $3,000 for each year of the project life. The MARR is 12%. Using Excel, simulate 100 iterations to determine the expected value and standard deviation of the present worth. Clearly identify both in your Excel spreadsheet. Is the expected present worth of this project positive or negative, and would you recommend investing in this project ? Identify your answer in your Excel spreadsheet. create a histogram of your simulation results to illustrate the resulting distribution.

Reference no: EM131562065

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