Pleaes provide a Step-by-Step solution to Problem 13.5 parts (a) through (d). Thank you.

ation. The Aberdeen Development Corporation (ADC) is prob 13.5 reconsidering the Aberdeen Resort Hotel project. It would be located on the picturesque banks of Grays Harbor and have its ls per own championship-level golf course The cost to purchase the land would be S1 million, payable now. Construction costs would be approximately $2 million Com payable at the end of year 1. However, the construction costs are uncertain. These costs could be up to 20 percent higher or lower ched than the estimate of $2 million. Assume that the construction puter costs would follow a triangular distribution g the ADC is very uncertain about the annual operating profits (or was losses) that would be generated once the hotel is constructed. Its n. As best estimate for the annual operating profit that would be gener- f tri ated in years 2, 3, 4, and 5 is $700,000. Due to the great uncertainty vary the estimate of the standard deviation of the annual operating profit dem er of in each year also is $700,000. Assume that the yearly profits are statistically independent and follow the normal distribution. model After year 5, ADC plans to sell the hotel. The selling price is likely to be somewhere between $4 and $8 million (assume a ation uniform distribution). ADC uses a 10 percent discount rate for calculating net present value. (For purposes of this calculation, ion assume that each year's profits are received at year-end.) Use five RSPE to perform 1,000 trials of a computer simulation of this project on a spreadsheet eted a. What is the mean net present value (NPV) of the ula project? (Hint: The NPV (rate, cash stream) func- tion in Excel returns the NPV of a stream of cash n to flows assumed to start one year from now. For example, NPV(10%, C5: F5) returns the NPV at a 10% discount rate when C5 is a cash flow at the end of year 1, D5 at the end of year 2, E5 at the end of year 3, and F5 at the end of year 4.) File E to b. What is the estimated probability that the project will yield an NPV greater than $2 million