Chapter 24 Self-Study Questions

1.(0.20 * –$2166) + (0.55 * $2008) + (0.25 * $6124) = –$433 + $1104 + $1531 = $2202
3.The PW(14) of the project given the law is repealed in any year Y is as follows:

Number of Years Until Law Is RepealedProbability of Repeal That YearPW(i) if Repealed That YearPW(i) * Probability
10.1–$32,556–$3256
20.2–$17,066–$3413
30.2–$3568–$714
40.3$8274$2482
50.1$18,662$1866
60.1$27,774$2777
  Total–$258

The expected value of the project is –$258; the company should not invest in the project.

6.Slightly more than 12 calendar months
8.19.3 calendar months
9.About 40 staff months
13.
14.

The expected value of the root node is $66k; this ...

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