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The first cost, life, and annual benefit for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic(PS) estimates are given. If the

The first cost, life, and annual benefit for a prospective project are uncertain. Optimistic (OP), most likely (ML), and pessimistic(PS) estimates are given. If the interest rate is 25%, what is the present worth difference between a total worst case scenario and a total best case scenario?

Parameter

Pessimistic

Most Likely

Optimistic

Fist cost

150000

100000

80000

Annual benefit

25000

45000

50000

Project life

5

7

9

a) $15.8

b) $42.2

c) $181.3

d) $282.5

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