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Please use Excel to complete the problem Consider two alternative designs, A and B, for an investment opportunity. Suppose there is uncertainty concerning the Initial
Please use Excel to complete the problem
Consider two alternative designs, A and B, for an investment opportunity. Suppose there is uncertainty concerning the Initial Investment (P), Yearly Operating and Maintenance cost (O&M), and the Net Annual Revenue (R) The parameters are uniformly distributed with the possible values shown below Design A Min (a) Max (b) Parameters Initial Investment (P) $300,000 $350,000 1. $20,000 $25,000 2. Operating and Maintenance cost (O&M) Net annual revenue (R) $45,000 $56,000 3. Design B Min (a) Max (b) Parameters Initial Investment (P) $450,000 $530,000 1. Operating and Maintenance cost (O&M) 2. $15,000 $18,000 Net annual revenue (R) 3. $60,000 $66,000 Based on MARR= 15%, and 10 years planning horizon a) Compare the PW(A) and PW(B) based on the expected value of parameters Hint: If random variable X is uniformly distributed [X- U(a,b)], then its expected value is: E(X) 2 (ab)Step by Step Solution
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