Problem
Two investment alternatives are being considered. The data below have been estimated by a panel of experts, and all cash flows are assumed to be independent. Life is not a variable.
Alternative A Alternative B
Std. Std.
Expected Deviation Expected Deviation
End of Cash of Cash Cash of Cash
Year Flow Flow Flow Flow
0 -$8,000 $0 -$12,000 $500
1 4,000 600 4,500 300
2 6,000 600 4,500 300
3 4,000 800 4,500 300
4 6,000 800 4,500 300
With MARR = 15% per year, determine the mean and standard deviation of the incremental PW [i.e., ?(B - A)].
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.