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Chapter 5 solution

# Chapter 5 solution - Section A LT Group 9 5.2 Explain how...

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Section A : LT Group 9 5.2 Explain how the values of a discrete random variable differ from the values of a continuous random variable. Result of a discrete random variable always takes an integer value. For example, flipping a coin is a random process and the number of heads or tails is represented by an integer value. Therefore, number of heads or tails is a discrete random variable. On the other hand, Continuous random variables may take any value within a range of values. For example, average height of a group of boys could be a non-integer value (5.5, 5.1, 6.3, etc), so it is not a discrete variable, but a continuous random variable . 5.16 Foundations of Financial Management Expand semiconductor capacity Sales Probability PV of cash flow from sales (\$ mln) Initial cost (\$ mln) NPV (\$ mln) High 0.50 \$100.0 \$60.0 \$40.0 Moderate 0.25 \$75.0 \$60.0 \$15.0 Low 0.25 \$40.0 \$60.0 -\$20.0 Expand semiconductor capacity Sales Probability PV of cash flow from sales (\$ mln) Initial cost (\$ mln) NPV (\$ mln) High 0.20 \$200.0 \$60.0 \$140.0 Moderate 0.50 \$75.0 \$60.0 \$15.0 Low 0.30 \$25.0 \$60.0 -\$35.0 a)

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Chapter 5 solution - Section A LT Group 9 5.2 Explain how...

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