Expected profits over the life of the investment


Question 1: Two electrical systems are being compared for a new industrial plant. The one system will have first cost of $200,000 and annual operating costs of $10,000. The second system will have first cost of $300,000 and annual operating costs of $5,000. Each system will be depreciated over a period of 10 years using straight line depreciation. The company is in a 35% tax bracket. Which system should be selected if they both help produce the same expected profits over the life of the investment?

Question 2: Sample has a mean value of 84 and a standard deviation of 5.2. What is the probability of obtaining a value between 82 and 88?

Question 3: Using the data set 3 8 6 5 7 11 6 4 9 9. What value would you select to have less than a 25% chance of having a number smaller than this value. What is the chance that a value will be greater than 8 for the data set in problem 6?

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Finance Basics: Expected profits over the life of the investment
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