Equipment investment in terms of standard deviation

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Find the expected EUAW from the cost data provided in the table below for an equipment being considered at John Case Inc. in Dickson, Tennessee. Because of the uncertainty of technology being used in this equipment, it has not been possible to get the initial cost accurately. The annual benefit, however, is estimated to be $20,000 with a possible equipment life of 5 years. The salvage value is expected to be 10% of the initial cost. MARR=8%.

First Cost 50, 000      80, 0000      100,000   125,000

                 0.25            0.35             0.30            0.10

b) Determine the associated risk measure in this equipment investment in terms of standard deviation.

Reference no: EM13691138

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