please answer Problem 2(stochastic)

A A B C D E F G H I J K L M 3 You are analyzing an investment with the following characteristics: Inflation 4 Year* Inflow Outflow Rate $ 100,000.00 0 6 1 $ 30,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 10 5 $ 25,000.00 $ 5,000.00 0.02 115 $50,000.00 0.02 12 *Initial investment occurs at the beginning of the year. Inflows and expenses occur at the end of the year. The recovery is 50% of the initial cost and occurs no come 14 Determine the Net Present Value assuming the required rate of return [() is 5%. 17 Problem 2 (stochastic): 18 Assume the following characteristics for inflows, outflows and inflation: The initial outflow is a uniform distribution between $90,000 and $110,000. Annual outflows for operating costs are 5% of the initial investment. Inflows other than the recovery are normally distributed with the mean shown and the standard deviation equal to ten percent of the mean. Inflation rates are normally distributed, with a mean of 2% and the standard deviation of 1%. Sa 24 a. What is the NPV? 25 b. What is the probability that the NPV will be between $20,000 and $30,000? 26 c. What is the probability that the NPV will be greater than $20,000? 28 Problem Solution - deterministic Solution-stochastic Type here to search A A B C D E F G H I J K L M 3 You are analyzing an investment with the following characteristics: Inflation 4 Year* Inflow Outflow Rate $ 100,000.00 0 6 1 $ 30,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 $ 25,000.00 $ 5,000.00 0.02 10 5 $ 25,000.00 $ 5,000.00 0.02 115 $50,000.00 0.02 12 *Initial investment occurs at the beginning of the year. Inflows and expenses occur at the end of the year. The recovery is 50% of the initial cost and occurs no come 14 Determine the Net Present Value assuming the required rate of return [() is 5%. 17 Problem 2 (stochastic): 18 Assume the following characteristics for inflows, outflows and inflation: The initial outflow is a uniform distribution between $90,000 and $110,000. Annual outflows for operating costs are 5% of the initial investment. Inflows other than the recovery are normally distributed with the mean shown and the standard deviation equal to ten percent of the mean. Inflation rates are normally distributed, with a mean of 2% and the standard deviation of 1%. Sa 24 a. What is the NPV? 25 b. What is the probability that the NPV will be between $20,000 and $30,000? 26 c. What is the probability that the NPV will be greater than $20,000? 28 Problem Solution - deterministic Solution-stochastic Type here to search