A firm is considering whether the following project should be undertaken if its life is 10 years and it has no salvage value. The firm uses an interest rate of 10% to evaluate engineering projects. The Net Revenue below is dollars per year for the life of the project. P is the probability of occurrence. What is the likely Present Worth? Should they undertake the project?
- First cost P Net Revenue P
- $300,000 0.3 $ 70,000 0.2
- 400,000 0.4 90,000 0.5
- 600,000 0.2 100,000 0.2
- 700.000 0.1 105,000 0.1