Unfortunately, the Capital Investment Committee refused to approve your recommendation (Problem 1) since you did not consider the uncertainty inherent in these types of investments. You pull out your very dog-eared text from PMAN 635 and repeat your analysis, this time using Crystal Ball and the following information

a.Investment A:

i.Year 0 Investment cost: Triangular distribution (optimistic: $125,000; most likely: $150,000; pessimistic: $175,000)

ii.Year 1-5 operating cost: Normal distribution (mean of $10,000, standard deviation of $2,000)

iii.Year 1 Benefits: Normal distribution (mean of $90,000, standard deviation of $20,000)

iv.Year 2 Benefits: Normal distribution (mean of $55,000, standard deviation of $15,000)

v.Year 3 Benefits: Normal distribution (mean of $35,000, standard deviation of $10,000)

vi.Year 4 Benefits: Normal distribution (mean of $20,000, standard deviation of $5000)

vii.Year 5 Benefits: Normal distribution (mean of $20,000, standard deviation of $5000)

b.Investment B:

i.Year 0 Investment cost: Triangular distribution (optimistic: $75,000; most likely: $80,000; pessimistic: $95,000)

ii.Year 1 Benefits: Normal distribution (mean of $45,000, standard deviation of $20,000)

iii.Year 2 Benefits: Normal distribution (mean of $15,000, standard deviation of $5,000)

iv.Year 3 Benefits: Normal distribution (mean of $10,000, standard deviation of $3,000)

v.Year 4 Benefits: Normal distribution (mean of $10,000, standard deviation of $3,000)

vi.Year 5 Benefits: Normal distribution (mean of $15,000, standard deviation of $5,000)

c.If the Internal Rate of Return (IRR) is still 6%, what is the NPV for each investment?