This is engineering economic analysis question. Finals in 2 days What I know is:

Question

This is engineering economic analysis question. Finals in 2 days

What I know is:

Highest Joint Probability is Most likely

Lowest Joint Probability is Optemistic

Now the question is how do I determine which one is pessimistic based on joint probability.

Can someone please explain.

Yearly Saving (S) P 14,000 14,000 14,000 29,000 29,000 29,000 43,000 43,000 43,000 Useful life (vears 4 Joint Probabilitv 0.165 Pessimistic 0.099 0.066 0.33 0.33 0.33 0.45 0.45 0.45 0.22 0.22 0.22 0.5 0.3 0.2 0.50.225 Most Likel 0.3 0.2 0.5 0.3 0.2 4 0.135 0.192 0.110 0.066 0.044 - Optimistic 4

Explanation / Answer

Optimistic is highest yearly savings and highest usual life..In our case, 43000 and 8 years, which coincidenatllay is lowest joint probaiblity but not necessarily

most likely is highest joint probaiblity

pessimistic is lowest yearly savings and lowest usual life combination..In our case, 14000 and 4 years

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