6(a) A company has $500,000 to invest in any one of the mutually exclusive projects shown below. Projects A, B, C, and E have a life of 4 years, but Project D has a 3 years life. The outcomes shown in the table are annual net income in thousands of dollars of after-tax cash flow. The after tax MARR is 8%. Project S4 200 B C S1 200 50 100 00 300 States of Nature: Potential Market Conditions S2 S3 200 200 150 500 0 300 200 350 200 200 100 D 4 100 50 0 Since each of the proposals depends upon public acceptance of an untested new product, there is considerable doubt about the estimates of yearly net incomes shown in the matrix. That is, the probabilities of States of Nature are not known, but these can be assumed to have the equal likelihood of occurrence (i.e. equal probabilities). Which project is the choice? 6(b). There are several methods available to discover defective welds. A company has investigated two methods. Method 1 costs $1.00 per inspection and detects defects 60 percent of the time. Method 2 costs $2.90 per test but always detects a defective weld. When a defective weld goes undetected, the estimated cost to the company is $100 for replacement and other incidental costs. The probability of a defective weld is 0.05. Using the expected-value criterion, determine whether method 1 or method 2 should be used or whether the company is better off with no inspection procedure (i.c., the do-nothing option). So, compare results for: Method 1, Method 2, and Do nothing