A company has improved its anti-virus program and has released a new version. Assume there is a
Question:
A company has improved its anti-virus program and has released a new version. Assume there is a 0.6 probability that the users of this anti-virus will upgrade the version in any particular year. That is, the upgrade year of the user is a geometric random variable. The revenue generated from the upgrade (when it occurs) follows a normal distribution with a mean of $80,000 and a standard deviation of $22,000.
a. Complete a simulation model that analyzes the net present value of the revenue from the user upgrade. Use an annual discount rate of 8 percent.
b. What is the average net present value earned by the company?
c. What is the standard deviation of net present value?
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams