A Company Has Improved Its Anti-Virus Program and Has Released

question 27

Essay

A company has improved its anti-virus program and has released a new version. Assume there is a 0.6 probability that the users of this anti-virus will upgrade the version in any particular year. That is, the upgrade year of the user is a geometric random variable. The revenue generated from the upgrade (when it occurs) follows a normal distribution with a mean of $80,000 and a standard deviation of $22,000.
a. Complete a simulation model that analyzes the net present value of the revenue from the user upgrade. Use an annual discount rate of 8 percent.
b. What is the average net present value earned by the company?
c. What is the standard deviation of net present value?

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Definitions:

Lipids

A broad group of naturally occurring molecules which includes fats, waxes, sterols, fat-soluble vitamins, and others, known for being a major source of energy.

Proteins

Large, complex molecules made up of amino acids that perform a vast array of functions within organisms, including structural support, transporting molecules, and catalyzing metabolic reactions.

Phylum

A taxonomic grouping of related, similar classes; a category beneath the kingdom and above the class.

Chordata

A phylum of animals possessing a notochord at some stage in their development, including vertebrates like fish, amphibians, reptiles, birds, and mammals.