A Project with a 3-Year Life Has the Following Probability

question 40

Multiple Choice

A project with a 3-year life has the following probability distributions for possible end of year cash flows in each of the next three years: Using an interest rate of 8 percent,find the expected present value of these uncertain cash flows.(Hint: Find the expected cash flow in each year,then evaluate those cash flows. )

• A) $1,204.95
• B) $835.42
• C) $1,519.21
• D) $1,580.00
• E) $1,347.61

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Definitions:

Project Resources

The various assets, such as time, money, personnel, and tools, allocated to achieve the objectives of a project.

Activities

Tasks or actions that are part of a project or process.

Estimations

Approximations or educated guesses about a project's timescales, costs, and resources, based on available data and experience.

Activity Durations

The total time taken from the start to the finish of an activity.