can you help me how to solve this problem? the present wort 10-16 A robot has ju

Question

can you help me how to solve this problem?

the present wort 10-16 A robot has just been installed at a cost of $81.000. A It will have no salvage value at the end of its useful life. Savings Useful per Year Probability Life (years) Probability 1/6 $18,000 0.2 20,000 0.7 2/3 22,000 0.1 (a) What is the joint probability distribution for savings per year and useful life? (b) Define optimistic, most likely, and pessimistic scenarios by using both optimistic, both most likely, and both pessimistic estimates. What is the rate of return for each scenario?

Explanation / Answer

9 Cases are shown below

                0.01667

b) Both optimistic,

a) 22000 * 12

We use IRR forumla to calculate return

b) Both most likely - 20000* 5

IRR=7.46%

c) pessimistic = 18000*4 ( IRR cannot be calculated since it is negative.

Savings per year Useful Life P( Savings) P(Useful Life) P(Both combined) 18000 12 0.2 1/6                 0.03333 18000 5 0.2 2/3                 0.13333 18000 4 0.2 1/6                 0.03333 20000 12 0.7 1/6                 0.11667 20000 5 0.7 2/3                 0.46667 20000 4 0.7 1/6                 0.11667 22000 12 0.1 1/6                 0.01667 22000 5 0.1 2/3                 0.06667 22000 4 0.1 1/6

                0.01667

b) Both optimistic,

a) 22000 * 12

We use IRR forumla to calculate return

b) Both most likely - 20000* 5

IRR=7.46%

c) pessimistic = 18000*4 ( IRR cannot be calculated since it is negative.

IRR = 25.36

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