When returns from a project can be assumed to be normally distributed, such as those shown...
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When returns from a project can be assumed to be normally distributed, such as those shown in Figure 13-6 (represented by a symmetrical, bell-shaped curve), the areas under the curve can be determined from statistical tables based on standard deviations. For example, 68.26 percent of the distribution will fall within one standard deviation of the expected value ( D= 10). Similarly, 95.44 percent will fall within two standard deviations (D20), and so on. An abbreviated table of areas under the normal curve is shown next Number of a's from Expected Value -and- 0.50 0.1915 0.3830 1.00 0.5415 9.6826 1.15 8.3749 8.7498 1.58 0:4332 0.3664 2.96 0.4985 0.9970 Assume Project A has an expected value of $26,000 and a standard deviation (a) of $5,200 a. What is the probability that the outcome will be between $23,400 and $28,6007 Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Probability . What is the probability that the outcome will be between $18,200 and $33,800? Note: Do not round intermediate calculations. Round your answer to 4 decimal place Probability c. What is the probability that the outcome will be at least $20,000? Note: Do not round intermediate calculations. Round your answer to 4 decimal places.. Probability d. What is the probability that the outcome will be less than $41,410? Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Probability When returns from a project can be assumed to be normally distributed, such as those shown in Figure 13-6 (represented by a symmetrical, bell-shaped curve), the areas under the curve can be determined from statistical tables based on standard deviations. For example, 68.26 percent of the distribution will fall within one standard deviation of the expected value ( D= 10). Similarly, 95.44 percent will fall within two standard deviations (D20), and so on. An abbreviated table of areas under the normal curve is shown next Number of a's from Expected Value -and- 0.50 0.1915 0.3830 1.00 0.5415 9.6826 1.15 8.3749 8.7498 1.58 0:4332 0.3664 2.96 0.4985 0.9970 Assume Project A has an expected value of $26,000 and a standard deviation (a) of $5,200 a. What is the probability that the outcome will be between $23,400 and $28,6007 Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Probability . What is the probability that the outcome will be between $18,200 and $33,800? Note: Do not round intermediate calculations. Round your answer to 4 decimal place Probability c. What is the probability that the outcome will be at least $20,000? Note: Do not round intermediate calculations. Round your answer to 4 decimal places.. Probability d. What is the probability that the outcome will be less than $41,410? Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Probability
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Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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