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Question 1 a. Risk of project A is analyzed by Monte Carlos simulation techniques with Crystal Ball software. The results from Crystal Ball show that
Question 1 a. Risk of project A is analyzed by Monte Carlos simulation techniques with Crystal Ball software. The results from Crystal Ball show that Net Present Value (NPV) of project A is followed a normal probability distribution with parameters as follows: . Expected value of NPV of project A is 40 million VND . Standard deviation of NPV of project A is 30 million VND a.l. Determine the probability that the NPV of project A is less than zero a.2. Should you invest in project A? Give brief reason for your decision. b. Risk of project B is analyzed by Monte Carlos simulation techniques with Crystal Ball software. The results from Crystal Ball show that Net Present Value (NPV) of project B is followed a normal probability distribution with parameters as follows: . Expected value of NPV of project B is 40 million VND . Standard deviation of NPV of project B is 25 million VND b.1. Determine the probability that the NPV of project B is positive b.2. Should you invest in project A or B? Give brief reason for your decision. Question 2 An investor intends to buy a barrel of oil today and sell in a year time. Today's price PO is certain $75. Next year's price P1 is uncertain. Assume P1 is followed Normal distribution with average value of $90 and standard deviation of $15. Assume a discount rate required by investor is 8%/year. a. What is the probability, that the P1 is lower than 90? b. What is expected value of NPV of buying a barrel? c. What is standard deviation of NPV of buying a barrel? d. What is the probability, that the NPV of buying a barrel is less than zero
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