Capital recovery portion consists
Course:- Business Economics
Reference No.:- EM13837309

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In an annual worth calculation, the capital recovery portion consists of all the following EXCEPT:

Initial investment

Salvage value

Annual operating cost

Non-recurring costs

Normal Failure Law

The lifetime of a component can be described by a Normal Failure Law (i.e. the Failures of such component is following a Normal Distribution). The Mean lifetime is 5900 hours and the standard deviation of the lifetime is 700 hours.

(a) What is the probability that a component will function for a time-period of 4500 hours? (i.e. there is no failure until after 4500 hours.)

(b) What is the probability that one of such component will be functioning between (5900-700, 5900+700) hours?

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