Assignment%2010.docx

# Assignment%2010.docx - Best Alternative is A 12-5 E(X = ∑...

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ASSIGNMENT 10 10-17. Individual B-C ratios of all projects are bigger than 1→They are all feasible! Rank the alternatives according to order of increasing “equivalent worth of cost” →DN- B – D – A – C N=80 years → (A/P, i%, 80) = i B→D : ∆B / ∆C = (\$9,000-\$8,000)/[(\$55,000-\$52,000)(A/P,12%,80)] = (\$1,000)/[\$3,000(0.12)] = 2.78 > 1, so choose D. D→A : ∆B / ∆C = (\$10,000-\$9,000)/[(\$62,000-\$55,000)(A/P,12%,80)] = (\$1,000)/[\$7,000(0.12)] = 1.19 > 1, so choose A. A→C : ∆B / ∆C = (\$20,000-\$10,000)/[(\$150,000-\$62,000)(A/P,12%,80)] = (\$10,000)/[\$88,000(0.12)] = 0.95 < 1, so keep A.

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Unformatted text preview: Best Alternative is A ! 12-5. E(X) = ∑ g G G ±²g G ³ = 0(0.05) + 1(0.40) + 2(0.25) + 3(0.15) = 1.35 E(S) = 5(0.35) + 6(0.15) + 8(0.35) = 5.45 E(P) = E(X).E(S) = (1.35).(5.45) = 7.36 V(X) = ∑ g G ´ G ±²g G ³ − [µ²¶³] ´ = (0) 2 (0.05) + (1) 2 (0.40) + (2) 2 (0.25) + (3) 2 (0.15) – (1.35) 2 V(X) = 0.9275 V(S) = (5) 2 (0.35) + (6) 2 (0.15) + (8) 2 (0.35) – (5.45) 2 = 6.85 V(X.S) = (E(X)) 2 V(S) + (E(S)) 2 V(X) + V(X)V(S) V(X.S) = (1.35) 2 (6.85) + (5.45) 2 (0.9275) + (0.9275)(6.85) V(X.S) = V(P) = 46.38 g G = 6.81...
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## This note was uploaded on 03/17/2012 for the course MS 303 taught by Professor T during the Spring '12 term at Sabancı University.

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Assignment%2010.docx - Best Alternative is A 12-5 E(X = ∑...

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