Mayer Company is considering investing in a new plant that will produce a product for which there is an established market. Demand for the product historically has followed a random normal distribution and has been independent from one period to the next. Management has determined that the expected net present value of the investment is $30,000, and the standard deviation of the expected net present value is $25,000.
Required:
(1) Determine the 95% confidence interval for the net present value, that is, the range within which the net present value of the proposed investment will fall about 95% of the time.
(2) Using the table of selected areas under the normal curve in Exhibit 24-8, determine the probability that the net present value of the proposed investment will exceed zero.