Determine the mean and standard deviation of present worth

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An investment opportunity has the potential of generating yearly revenues with the associated probabilities for the next five years as shown below. The salvage value at the end of five years is 0. The potential revenue in any given year is independent of any other year. Determine the mean and standard deviation of the present worth, using an interest rate of 12%.

Potential Revenue, $

Probability


20,000

0.30


30,000

0.40


50,000

0.20


60,000

0.10

 

Reference no: EM13157189

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