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The tree diagram in figure below describes the uncertain cash flows for an engineering project....

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Finance

The tree diagram in figure below describes the uncertain cash flows for an engineering project. The analysis period is two years, and MARRequals=18% per year. Based on this information,

a. What are the E(PW), V(PW), and SD(PW) of the project?

b. What is the probability that PW 0?

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Time Period 0 1 2 $17,900 0.3 $5,000 0.2 $20,700 0.5 $22,900 0.2 $21,400 0.3 - $26,000 $13,500 0.5 0.4 $23,500 0.3 $28,900 0.3 $23,600 0.4 $18,500 0.5 $26,300 0.1 $30,400 Discrete Compounding; i = 18% Single Payment Compound Amount Uniform Series Compound Amount Factor Sinking Capital Recovery Present Present Fund Worth Factor Factor Worth Factor Factor Factor To Find F Given P To Find P Given F To Find F To Find A To Find A To Find P Given A P/A Given A Given F Given P F/A A/F F/P P/F A/P 0.8475 1.0000 1 1.1800 0.8475 1.0000 1.1800 2.1800 0.6387 2 1.3924 0.7182 1.5656 0.4587 3 1.6430 0.6086 3.5724 2.1743 0.2799 0.4599 1.9388 5.2154 2.6901 0.1917 4 0.5158 0.3717 0.1398 5 2.2878 0.4371 7.1542 3.1272 0.3198

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