A road wilt need to be widened in the future at a cost of $4.2 million to accommodate the anticipated traffic growth. The widening will be needed in 4 years if the city's optimistic growth estimate is used. The most likely and pessimistic estimates push the widening need to year 8 and year 15 respectively. The town uses an i=8%, the optimistic estimate has a probability of 20% and the pessimistic 40%.
a) What is the PW of each scenario?
b) What is the mean value of the PWs?
c) What is the expected number of years until the widening is needed?