56. A proposed project has the following cash fl ow estimates.

Assuming independent cash fl ows, a normally distributed net present value, and a minimum attractive rate of return of 15%, determine the following.
For the following questions, determine an analytical solution:

a. the mean and standard deviation of net present value

b. the probability that the net present value is negative

c. the probability that the net present value is greater than $1,000,000 Assume the initial investment and annual receipts are normally distributed.

d. Using a Monte Carlo simulation with 10,000 iterations, estimate the probability that the present worth is negative.

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End of Year Mean Net Cash Flow Standard Deviation 0 12 -$800,000 $1,000,000 $1,000,000 of Cash Flow $250,000 $450,000 $600,000