A project has a life of 10 years, and no salvage value. The firm uses an interest rate of 12% to evaluate engineering projects. The project has an uncertain first cost and net revenue.
(a) What is the joint probability distribution for first cost and net revenue?
(b) Define optimistic, most likely, and pessimistic scenarios by using both optimistic, both most likely, and both pessimistic estimates. What is the present worth for each scenario?