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Q5. Firm ABC is evaluating a project, which costs -6,000 initially and will last for five years. The cash flows in year 1, 2, 3,
Q5. Firm ABC is evaluating a project, which costs -6,000 initially and will last for five years. The cash flows in year 1, 2, 3, 4, and 5 are uncertain, i.e. random numbers. The cash flow in each future year follows a normal distribution that has a mean of 1,500 and a standard deviation of 300. Assume the discount rate is 6%. Please calculate the probability that the project is acceptable.
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