15. A plant manager is considering investing in a new $30,000 machine. Use of the new machine...
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15. A plant manager is considering investing in a new $30,000 machine. Use of the new machine is expected to generate a cash flow of about $8,000 per year for each of the next 5 years. However, the cash flow is uncertain, and the manager estimates that the actual cash flow will be normally distributed with a mean of $8,000 and a standard deviation of $500. The discount rate is set at 8% and assumed to remain constant over the next 5 years. The company evaluates capital investments using net present value. How risky is this investment? Develop an appropriate simulation model and conduct experiments and statistical output analysis to answer this question.
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Related Book For
Business Analytics Methods Models And Decisions
ISBN: 9780132950619
1st Edition
Authors: James R. Evans
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