Monday

January 26, 2015

January 26, 2015

Posted by **Jenny** on Thursday, November 2, 2006 at 12:22am.

A firm computes the probability distribution of possible net present values for a project and finds that it has an expected value of $125,000 and a standard deviation of $75,000. Assuming that the distribution of net present value is normal, compute the probability that the net present will be less than zero.--------------------

You will need cumlative normal distribution table. First calculate how many standard deviations away from the mean is zero. (125/75)=1.67

Look up this in the table. In my stats book, the value is .9525. Ergo, in 95.25% of the time, the value will be zero or more.

**Answer this Question**

**Related Questions**

Finance math - Consider the project with the following expected cash flows: Year...

Managerial Finance - Jefferson Products, Inc., is considering purchasing a new ...

finance - All techniques with NPV profile- mutually exclusive projects. Projects...

financial management - 1)The cost of a project is $500,000 and the present value...

Finance - Stone Inc. is evaluating a project with an initial cost of $8,450. ...

Finance - Your firm is looking at a new investment opportunity, Project Alpha, ...

finance - A project has an initial requirement of $261,000 for fixed assets and...

Finance - (Inflation) A project’s initial investment is $40,000, and it has a ...

Finance - Cooper construction is considering purchasing new technologically ...

financ - All techniques with NPV profile- mutually exclusive projects. Projects ...