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A plant maneger is considering investing in a new $40,000 machine. Use of the new machine is expected to generate a cash flow of about

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A plant maneger is considering investing in a new $40,000 machine. Use of the new machine is expected to generate a cash flow of about $9,000 per yoar for each of the next fve years. However, the cash flow is uncertain, and the manager estimates that the actuat cash flow will be normally distributed with a mean of $9,000 and a standard doviation of $500. The discount rate is set at 5% and assumed to remain constant over the next five years. The company evaluates capital investments using net present value. How risky is this investment? Develop and run a simulation model to answer this question using 50 trials. Cick the icon to view a sample of 50 simulation trial results. Say the values of the mean of the cash flow distribution, the standard deviation of the cash Sow distribution, the inital investment, and the discount rate are entered in cells B3, B4, B5. and B6, respectively. Then, for the Monte Carlo simulation, the cash flow for an individual year is randomly generated using the Excel formula wNORM. INV(RAND0. B 3 , B 4), if the randomly-generated cash flows for the five years are in cells B9, C9, D9, E9, and F9, then the Excel formula for the net present value is =B5+NPV(B,89 : F, 9 ) (Type whole numbers.) Detormine the risk level of the investment using the provided sample of 50 simulation trial results. The probability of a nonpositive net present value is P(NPV0)= This means the investment is (Round to two decimal places as needed.)

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