Modifying an assembly line has a first cost of $165,000, and its salvage value is $0. The firm's interest rate is 10%. The savings shown in the table depend on whether the assembly line runs one, two, or three shifts and on whether the product is made for 4 or 6 year.

Listed in

Shifts/day

Savings/year

Probability

Life in years

Probability

Option 1

1$25,0000

.25

4

0.65

Option 2

30,000

0.40

6

0.35

Option 3

35,000

0.35

No life given

No probability given

Find the joint probabilities. Define optimistic, most likely, and pessimistic scenarios. What is the PW for each scenario?

Problem 1: Modifying an assembly line has a first cost of $165,000, and its salvage value is $0. The firm's interest rate is 10%. The savings shown in the table depend on whether the assembly line runs one, two, or three shifts and on whether the product is made for 4 or 6 year. Shifts/day Savings/year Probability Life in years Probability 1 $25,000 0.25 4 0.65 2 30,000 0.40 6 0.35 3 35,000 0.35 Find the joint probabilities. Define optimistic, most likely, and pessimistic scenarios. What is the PW for each scenario