Response to the following problem:
Consider the probability distribution of possible cash flow outcomes for Project XYZ:
Possible Cash Flow Probability
$2,000 1/6
$4,000 2/3
$6,000 1/8
Construct a simulation of the future cash flows using a six-sided die.
a. Rolling the die 30 times, what is the distribution of the possible cash flows?
b. Rolling the die a total of 60 times, what is the distribution of the possible cash flows?
c. Draw a frequency distribution of the results of rolling the die 60 times, plotting the frequency of occurrence on the vertical axis and the possible outcomes on the horizontal axis. How does this frequency distribution compare with the probability distribution?