# A small power plant using process waste heat has a first cost that is normally distributed with a…

A small power plant using process waste heat has a first cost that is normally distributed with a mean of \$350,000 and a standard deviation of \$50,000. The annual net savings are normally distributed with a mean of \$65,000 and a standard deviation of \$8000 per year. The power plant has no salvage value after a life that of 4, 5, 6, 7, or 8 years (uniformly distributed) The interest rate is 12%. Using Excels RAND function, simulate 25 iterations. What are the expected value and standard deviation of the PW? Do the answers change much if you do 100 iterations? Compare this
A small power plant using process waste heat has a first cost that is normally distributed with a mean of \$350,000 and a standard deviation of \$50,000. The annual net savings are normally distributed with a mean of \$65,000 and a standard deviation of \$8000 per year. The power plant has no salvage value after a life that of 4, 5, 6, 7, or 8 years (uniformly distributed) The interest rate is 12%. Using Excels RAND function, simulate 25 iterations. What are the expected value and standard deviation of the PW? Do the answers change much if you do 100 iterations? Compare this with the PW calculated using the expected first cost, annual benefit, and life. Which value is more accurate or useful? Data for Problems 19.119.5: National Motors is planning to build a new manufacturing plant. Data on the five sites still under consideration is shown below. Note that the Detroit site reuses some existing National Motors property, while the Big City site entitles the corporation to several tax breaks for locating in a depressed locale. Thus, these two sites are appreciably cheaper than the others.