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2. An energy efficiency project has a first cost of $300,000, a life of 10 years, and no salvage value. Assume that the
Posted: Thu May 19, 2022 9:11 am
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- 2 An Energy Efficiency Project Has A First Cost Of 300 000 A Life Of 10 Years And No Salvage Value Assume That The 1 (17.94 KiB) Viewed 69 times
2. An energy efficiency project has a first cost of $300,000, a life of 10 years, and no salvage value. Assume that the interest rate is 9%. The most likely value for annual savings is $60,000. The optimistic value for annual savings is $80,000 with a probability of 0.2. The pessimistic value is $40,000 with a probability of 0.3. a) What is the expected value of the outcome (PW)? b) What is the standard deviation of the outcome? c) What is your expected rate of return from the project and what is the associated risk?