A Firm Believes the Internal Rate of Return for Its

question 95

Essay

A firm believes the internal rate of return for its proposed investment can best be described by a normaldistribution with mean 36% and standard deviation 3%. What is the probability that the internal rate of returnfor the investment exceeds 42%?

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Definitions:

Atm

A unit of pressure, also known as atmosphere, approximately equal to the earth's atmospheric pressure at sea level.

Temperature

A measure of the average kinetic energy of the particles in a system, signifying how hot or cold the system is.

°C

Degrees Celsius, a unit of temperature on the Celsius scale, where 0°C represents the freezing point of water, and 100°C its boiling point at sea level.

Atm

Standard atmosphere, a unit of pressure defined as 101,325 Pa; also used to denote the atmospheric pressure at sea level.