Complete Question
The complete question is shown on the first uploaded image
Answer:
a
[tex]P(3) = 0.154[/tex]
b
[tex]P(4) = 0.026[/tex]
c
[tex]P( X \ge 3 ) = 0.18[/tex]
d
option C is correct
Step-by-step explanation:
From the question we are told that
The probability of success is p = 0.4
The sample size is n= 4
This adults believe follow a binomial distribution is because there are only two outcome one is an adult believes in reincarnation and the second an adult does not believe in reincarnation
The probability of failure is mathematically evaluated as
[tex]q = 1 - p[/tex]
substituting values
[tex]q = 1 - 0.4[/tex]
[tex]q = 0.6[/tex]
Considering a
The probability that exactly 3 of the selected adults believe in reincarnation is mathematically represented as
[tex]P(3) = \left n} \atop {}} \right. C_ 3 * p^3 * q^{n-3}[/tex]
substituting values
[tex]P(3) = \left 4} \atop {}} \right. C_ 3 * (0.40)^3 * (0.60)^{4-3}[/tex]
Here [tex]\left 4} \atop {}} \right.C_3[/tex] means 4 combination 3 . i have calculated this using a calculator and the value is
[tex]\left 4} \atop {}} \right.C_3 = 4[/tex]
So
[tex]P(3) = 4* (0.4)^3 * (0.6)[/tex]
[tex]P(3) = 0.154[/tex]
Considering b
The probability that all of the selected adults believe in reincarnation is mathematically represented as
[tex]P(n) = \left n} \atop {}} \right. C_ n * p^n * q^{n-n}[/tex]
substituting values
[tex]P(4) = \left 4} \atop {}} \right. C_ 4 * (0.40)^4 * (0.60)^{4-4}[/tex]
Here [tex]\left 4} \atop {}} \right.C_3[/tex] means 4 combination . i have calculated this using a calculator and the value is [tex]\left 4} \atop {}} \right.C_4 = 1[/tex]
so
[tex]P(4) = 1* (0.4)^4 * 1[/tex]
=> [tex]P(4) = 0.026[/tex]
Considering c
the probability that at least 3 of the selected adults believe in reincarnation is mathematically represented as
[tex]P( X \ge 3 ) = P(3 ) + P(n )[/tex]
substituting values
[tex]P( X \ge 3 ) = 0.154 + 0.026[/tex]
[tex]P( X \ge 3 ) = 0.18[/tex]
From the calculation the probability that all the 4 randomly selected persons believe in reincarnation is [tex]p(4) = 0.026 < 0.05[/tex]
But the the probability of 3 out of the 4 randomly selected person believing in reincarnation is [tex]P(3) = 0.154 \ which \ is \ > 0.05[/tex]
Hence 3 is not a significantly high number of adults who believe in reincarnation because the probability that 3 or more of the selected adults believe in reincarnation is greater than 0.05.
Determine if the process appears to be within statistical control. If not, state the reason why not.
a. It does not appear to be within statistical control because there is an upward shift.
b. It appears to be within statistical control.
c. It does not appear to be within statistical control because there is an upward trend.
d. It does not appear to be within statistical control because there is increasing variation.
Answer:
c. It does not appear to be within statistical control because there is an upward trend.
Step-by-step explanation:
Statistical process control is a method for quality control which employs statistical method to monitor and control process. It ensures operation efficiency and ensuring required specification to reduce wastes in production lines. Here the process variation is out of control because the statistical control has an upward trend.
The volume of a rectangular prism is the products it’s dimensions. If the dimensions of a rectangle prism are approximately 1.08 feet,5.25 feet, and 3.3 feet ,what is the approximate volume of the cube?Express your answer using an approximate level of accuracy.
Answer:
To find the volume of this cube, you would have to multiply 1.08 by 5.25 by 3.3 feet. If you did this, you would get: 18.711 feet^3. This is the volume of the rectangular prism.
Hope this helped!
The one-sample z test is: a. a hypothesis test b. used to test hypotheses c. concerning a single population with a known variance d. concerning at least one population e. concerning the variance in a population d. all of the above
Answer:
d. all of the above
Step-by-step explanation:
A one sample z test measures whether the mean of a population is greater, less or equal to a specific value. It is called one sampl z test since the standard normal distribution is used in calculation of critical values. It makes use of the null hypothesis and alternative hypothesis in determining if the mean is greater than or equal or less than the reference value. Variance and standard deviation is assumed to be known and at least one population is used
We have seen how to convert specified odds from a "fair bet" into the gamblerâs belief about the likelihood of an event happening. The following are related.a. Torik gives 5:3 odds that someone will walk in late for class tomorrow. What probability does lie assign for this event? b. Mikko believes there is a 60% chance that at least five students from this class will be at the next basketball game. If he were to set up odds, what would they be? c. Change the 60% to 75%. Now would would be the odds?
For what value of x does (x + 3)^2-5=0
Answer:
x = -3±sqrt( 5)
Step-by-step explanation:
(x + 3)^2-5=0
Add 5 to each side
(x + 3)^2-5+5=0+5
(x + 3)^2 = 5
Take the square root of each side
sqrt((x + 3)^2 )=±sqrt( 5)
x+3 = ±sqrt( 5)
Subtract 3 from each side
x+3-3 = -3±sqrt( 5)
x = -3±sqrt( 5)
Given the following hypotheses: H0: μ = 490 H1: μ ≠ 490 A random sample of 15 observations is selected from a normal population. The sample mean was 495 and the sample standard deviation 9. Using the 0.01 significance level:
a.) State the decision rule.
b.) Compute the value of the test statistic.
c.) What is your decision regarding the null hypothesis?
Answer:
We conclude that the population mean is equal to 490.
Step-by-step explanation:
We are given that a random sample of 15 observations is selected from a normal population. The sample mean was 495 and the sample standard deviation 9.
Let [tex]\mu[/tex] = population mean.
So, Null Hypothesis, [tex]H_0[/tex] : [tex]\mu[/tex] = 490 {means that the population mean is equal to 490}
Alternate Hypothesis, [tex]H_A[/tex] : [tex]\mu\neq[/tex] 490 {means that the population mean is different from 490}
The test statistics that will be used here is One-sample t-test statistics because we don't know about population standard deviation;
T.S. = [tex]\frac{\bar X-\mu}{\frac{s}{\sqrt{n} } }[/tex] ~ [tex]t_1_4[/tex]
where, [tex]\bar X[/tex] = sample mean = 495
s = sample standard deviation = 9
n = sample of observations = 15
So, the test statistics = [tex]\frac{495-490}{\frac{9}{\sqrt{15} } }[/tex] ~ [tex]t_1_4[/tex]
= 2.152
The value of t-test statistics is 2.152.
Now, at a 0.01 level of significance, the t table gives a critical value of -2.977 and 2.977 at 14 degrees of freedom for the two-tailed test.
Since the value of our test statistics lies within the range of critical values of t, so we have insufficient evidence to reject our null hypothesis as the test statistics will not fall in the rejection region.
Therefore, we conclude that the population mean is equal to 490.
How many solutions does the following system have x+y=3, 2x+2y-5
Answer:
Step-by-step explanation:
x + y = 3
2x + 2y = 5
-2x - 2y = -6
2x + 2y = 5
0 not equal to -1
no solution
IQ scores have a mean of 100 and a standard deviation of 15. What percentile corresponds to an IQ score of 115? Explain the steps you took to find the percentile.
Answer:
The percentile that corresponds to an IQ score of 115 is 34.13 %
Step-by-step explanation:
Here, we want to find the percentile that corresponds to an IQ score of 115.
To calculate this percentile, we start with making observations. From the question, we are told that the mean score is 100 while the standard deviation is 15.
Now we want to find the percentile for a score if 115. For a score of 115, we can see that the difference between this score and the mean is 15 which is exactly equal to the standard deviation.
What this means is that the score is within +1 SD of the mean.
For a score of within +1 SD of the mean, the percentile is 34.13%
A score at the mean is the 50th percentile, a score which is 1 SD above or below the mean has a percentile value of 34.13%
Please, I will like you to check the attachment to see how percentiles are valued given the number of standard deviations a particular value is from the mean.
Time spent using e-mail per session is normally distributed with a mean = to 8 minutes and standard deviation = 2minutes. If a random samples of 36 sessions were selected, the computed sample standard deviation would be
a. 0.25
b. 0.3333
c. 0.42
d. 0.48
Answer:
The correct option is (b) 0.3333.
Step-by-step explanation:
The standard deviation of the sampling distribution of sample mean [tex](\bar x)[/tex] is known as the standard error [tex](\sigma_{\bar x})[/tex].
The standard error is given as follows:
[tex]\sigma_{\bar x}=\frac{\sigma}{\sqrt{n}}[/tex]
The information provided is:
[tex]\mu=8\\\\\sigma=2\\\\n=36[/tex]
Compute the standard deviation of the sample mean as follows:
[tex]\sigma_{\bar x}=\frac{\sigma}{\sqrt{n}}[/tex]
[tex]=\frac{2}{\sqrt{36}}\\\\=\frac{2}{6}\\\\=\frac{1}{3}\\\\=0.3333[/tex]
Thus, the standard deviation of the sample mean is 0.3333.
Find the sum of the first 12 terms of the sequence 512, 256, 128, … This is infinite series notation, the answer is NOT 896...
Answer:
1023.75
Step-by-step explanation:
The sum of a geometric sequence is
sum = a( 1 - r^n) / (1-r)
where a is the first term r is the common ratio and r^n is the nth term
We need to find the common ratio
r = 256/512 = 1/2
sum = 512 ( 1 - 1/2^12) / ( 1-1/2)
=512( 1-.000244141) / (.5)
=512(.999755859) /.5
=1023.75
Answer:
1023.75
Step-by-step explanation:
sum = a( 1 - r^n) / (1-r)
a1 = 512
n = 12
r = 256 / 512 = 1/2
512 (1 - 1/2¹²)
therefore.. sum = ------------------ = 1023.75
1 - 1/2
opposite rays form a?
line
ray
point
plane
Answer:
ray is the answer for this
opposite rays form a line because they provide the two opposite directions in which the line extends infinitely.
Opposite rays form a what?Opposite rays are two rays that have the same endpoint but extend in opposite directions. When these opposite rays are extended infinitely in both directions, they form a straight line. A line is a set of points that extends infinitely in both directions, and opposite rays provide the two distinct directions in which the line can be extended.
The concept of opposite rays is derived from the concept of a line. A line can be defined as a straight path that extends infinitely in both directions. Opposite rays are a pair of rays that share a common endpoint and extend infinitely in opposite directions along this line.
For example, consider a line segment AB. If we extend one side of the line segment from point A and the other side from point B, we obtain two opposite rays: one from point A to infinity and the other from point B to infinity. Together, these opposite rays form the line on which the line segment AB lies.
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Yelena needs to swim a total of 8 miles this
week. So far, she swam 5 miles. Use the
equation 5 + m=8 to find how many more
miles Yelena needs to swim.
Answer:
3 miles
Step-by-step explanation:
5 + m=8
Subtract 5 from each side
5-5 + m=8-5
m = 3
She needs to swim 3 more miles
Answer:
Yelena needs to swim 3 more miles
Step-by-step explanation:
You need to solve for the variable "m", which represents the miles. Based on the information, Yelena swam 5 miles and she needs to swim 8. Solve:
[tex]5+m=8[/tex]
To find the value of m, you need to isolate it on one side of the equation. To do this, you need to get the 8 and 5 on the same side of the equal operation. For this, you need to use reverse operations. This undoes the value from one side and does the same on the other, keeping the equation balanced. Since we have a "positive 5", we take the opposite, which would be a "negative 5". So subtract 5 from both sides of the equation:
[tex]5-5+m=8-5[/tex]
Simplify. The 5's cancel each other out, leaving 0. 8-5 is 3:
[tex]m=3[/tex]
The total miles left that Yelena needs to swim is 3 miles.
:Done
What is the constant of variation, k, of the line y=kx through (3,18) and (5,30)? 3 6
Answer:
6
Step-by-step explanation:
The constant of variation is the slope
k = (y2-y1)/(x2-x1)
= (30-18)/(5-3)
=12/2
= 6
The value of constant of variation, k, is,
⇒ k = 6
What is Equation of line?
The equation of line in point-slope form passing through the points
(x₁ , y₁) and (x₂, y₂) with slope m is defined as;
⇒ y - y₁ = m (x - x₁)
Where, m = (y₂ - y₁) / (x₂ - x₁)
Here, the constant of variation, k, of the line y = kx through (3,18) and (5,30)
Since, The constant of variation is the slope,
Hence, We get;
k = (y₂ - y₁)/(x₂ - x₁)
= (30 - 18)/(5 - 3)
= 12/2
= 6
Thus, the value of constant of variation, k, is,
⇒ k = 6
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What is the volume of a square pyramid whose length of one side of its base is 9cm and whose height is 15cm. Show your work
Answer:
The answer is 405cm³Step-by-step explanation:
Volume of a pyramid is given by
[tex]V = \frac{1}{3} \times area \: of \: base \: \: \times height[/tex]
height = 15cm
From the question the pyramid is a square pyramid which means it's base is a square
Area of a square = l²
where l is the length of one side
l = 9cm
Area of square = 9² = 81cm²
So the volume of the pyramid is
[tex]V = \frac{1}{3} \times 81 \times 15[/tex]
[tex]V = 27 \times 15[/tex]
We have the final answer as
V = 405 cm³
Therefore the volume of the pyramid is
405cm³Hope this helps you
what is the prime factorization of 7?
As Prime factorization is a process of writing all numbers as a product of primes then The prime factorization of number 7 is 7.
What is Number system?A number system is defined as a system of writing to express numbers.
Prime factorization is a process of writing all numbers as a product of primes
The number 7 is a prime number, which means it is only divisible by 1 and itself.
Therefore, the prime factorization of 7 is simply 7 itself.
Hence, the prime factorization of number 7 is 7.
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The present price of a bus is rs 3000000if the price of bus depreciated the first two yrs by 10% and then 15% and 20% respectively in follow yrs.what is the price of bus after 4 yrs?
Answer:
The price of bus after 4 yrs is Rs.1652400
Step-by-step explanation:
Present price of car = Rs.3000000
We are given that the price of bus depreciated the first two yrs by 10%
So, The price after first two years =[tex]3000000(1-0.1)^2=2430000[/tex]
Now the price of bus depreciated by 15%
So, The price after third year = 2430000-0.15(2430000)=2065500
Now the price of bus depreciated by 20%
The price after fourth year =2065500-0.2(2065500)=1652400
Hence the price of bus after 4 yrs is Rs.1652400
as
8
3) The volume of
a wall, 5 times
high as it is board and 8
times as long as it is high, 12.8
(a.metors) Find The Breadth of the
Wall
Answer:
0.4 meters
Step-by-step explanation:
The volume is ...
V = LHB
12.8 m³ = (8(5B))(5B)(B) = 200B³ . . . fill in given values
0.064 m³ = B³ . . . . . simplify
∛0.064 m = B = 0.4 m
The breadth of the wall is 0.4 meters.
PLZ HELP 55 POINTS Two quantities, x and y, are related proportionally such that 3x=2y . Which equation shows the same proportional relationship? A x/y=3/2 B x/2=y/3 C x/3=y/2 D x/2=3/y
Answer:
B
Step-by-step explanation:
3x = 2y
One way to solve this is to simply plug in values. If we say the following:
x = 2
y = 3
Then, we can start testing.
A: [tex]x/y = 3/2[/tex]
by plugging 2 and 3 in, we see that A doesn't work.
B: x/2 = y/3
This works! First we should look at the other equations.
C: x/3 = y/2
Nope.
D: x/2 = 3/y
This also works, but only with certain numbers. If we were to make x = 4, and y = 6, this wouldn't work.
You could also find out all of this using algebra. so, our anwser is B.
Which equation demonstrates the additive identity property?
Answer:
See Explanation
Step-by-step explanation:
The options are not given; however, you can take a clue from my explanation to answer your question
Let x be a real number;
Additive identity property implies that; adding x to 0 or 0 to x gives x;
In other words;
[tex]x + 0 = x[/tex]
[tex]0 + x = x[/tex]
Note that x can be replaced with any real number; Take for instance
[tex]1 + 0 = 1[/tex]
[tex]0 + 2.5 = 2.5[/tex]
[tex]3 + 0 = 3[/tex]
There are uncountable number of examples;
However, take note that adding 0 to a given digit results in the exact digit and that's the implication of addition identity property
Answer:
(7+4i)+0=7+4i
Step-by-step explanation:
5/7 minus 2/9 please
Answer:
[tex]\large \boxed{31/63}[/tex]
Step-by-step explanation:
5/7 - 2/9
Make denominators equal by LCM.
(5 × 9)/(7 × 9) - (2 × 7)/(9 × 7)
45/63 - 14/63
Subtract fractions since denominators are equal.
(45 - 14)/63
31/63
Answer:
[tex]\frac{31}{63}[/tex]
Step-by-step explanation:
Find the LCM of 7 and 9: 63Find how much we increased each number to get to 63: we increased 7 by 9, and we increased 9 by 7Multiply the numerators by the corresponding increase numbers: 5 × 9 = 45, and 2 × 7 = 14Put the new numerators over the new denominators, so it looks like this: [tex]\frac{45}{63}[/tex] and [tex]\frac{14}{63}[/tex] Finally, subtract one from the other and here's what you get: [tex]\frac{31}{63}[/tex]Therefore, the answer is [tex]\frac{31}{63}[/tex].
Solve x2 + 9x + 8 = 0 by completing the square. What are the solutions?
O (1.-8)
O (1.8)
O (-1-8)
una compañía sabe que si produce "x" unidades mensuales su utilidad "u" se podría calcular con la expresión:
u(x)=-0.04x^2+44x-4000
donde "u" se expresa en dólares. Determine la razón del cambio promedio de la utilidad cuando el nivel de producción cambia de 600 a 620 unidades mensuales. Recuerde que la pendiente de la recta secante a la gráfica de la función representa a la razón de cambio promedio.
porfavor alguien que me explique el procedimiento :(
Answer:
Δf(u) /Δx = 92,8 ( razón de cambio promedio)
Step-by-step explanation:
La expresión de la utilidad de la empresa u(x) en función de la cantidad de unidades producidas "x" es:
u(x) = 0,04*x² + 44*x -4000
Entonces la razón de cambio promedio en un intervalo (a ; b) en este caso ( 620 ; 600 ) viene dada por la expresión:
Δf(x)/ Δx = [ f(b) - f(a) ]/( b - a )
en donde f(b) y f(a) se obtienen por sustitución de los valores a y b es decir 600 y 620 respectivamente en la función f(x) = u(x) entonces
Δf(u) /Δx = [ u(b) - u(a) ]/( b -a ) (1)
u(b) = 0,04*(620)² + 44*(620) - 4000
u(b) = 15376 + 27280 -4000
u(b) = 2656 unidades
u(a) = 0,04* (600)² + 44* 600 - 4000
u(a) = 14400 + 26400 - 4000
u(a) = 800
Sustituyendo esos valores en la ecuación 1
Δf(u) /Δx = 2656 - 800 / 620 - 600
Δf(u) /Δx = 92,8
All sacks of sugar have the same weight. All sacks of flour also have the same weight, but not necessarily the same as the weight of the sacks of sugar. Suppose that two sacks of sugar together with three sacks of flour weigh no more than 40 pounds and that the weight of a sack of flour is no more than 5 pounds more than the weight of two sacks of sugar. What is the largest possible weight (in pounds) of a sack of flour?
Answer:
The largest possible weight of flour is 11.25 pounds.
Step-by-step explanation:
To start with, we will assume that the weight of 1 sack of sugar = x pounds
We will also assume that the weight of 1 sack of flour = y pounds
So, the weight of 2 sacks of sugar = 2 * (x) = 2x
Same thing goes for the weight of 3 sacks of flour = 3 * (y) = 3y
Supposing that the weight of (2 sacks of sugar + 3 sacks of flour) ≤ 40 pounds
= 2x + 3y ≤ 40............ we'll call that equation 1.
Also, suppose that the weight of ( 1 sack of flour) ≤ 2 sacks of sugar + 5 pounds
= y ≤ 2x + 5........................ we'll call that equation 2
Therefore, we'll solve for the values of x and y in the two equations and we will get:
2x + 3y ≤ 40
y ≤ 2x + 5
Now, substitute the value of y into equation 1
2x + 3y ≤ 40 ⇒ 2x + 3(2x +5) =40
⇒ 2x + 6x + 15= 40
⇒ 8x + 15 = 40
⇒ 8x = 25
⇒ x = 25/8
⇒ x = 3.12
x cannot be more than 3.12 pounds, so we solve for y
Putting the value of x into equation 2, we'll get
⇒ 2y + 5 = 2(3.12) + 5
⇒ y = 11.25 pounds.
So, n cannot be more than 11.25 pounds
Please! David has several chains of length 5 and of length 7. By joining chains one after the other, David can create different lengths. Which of these lengths is impossible to make? A)10 B)12 C)13 D)14 E)15
Answer:
13
Step-by-step explanation:
A)5+5=10
B)5+7=12
C) impossible
D)7+7=14
E)5+5+5=15
A human factor expert recommends that there be atleast 9 square ft of floor space in a classroom for every student in the class. Find the min space required for 49 students
The data show the number of hours of television watched per day by a sample of 28 people. Use technology to answer parts (a) and (b) below. 1 1 2 8 8 4 8 7 8 3 1 2 8 2 4 7 4 0 5 7 7 8 9 3 6 2 2 7 a. Find the data set's first, second, and third quartiles. Upper Q 1 equals nothing Upper Q 2 equals nothing Upper Q 3 equals nothing
Answer:
Q1= 2, Q2 = 4.5, Q3 = 7.5
Step-by-step explanation:
firstly, put the data is other;
0 1 1 1 2 2 2, 2 2 3 3 4 4 4, 5 6 7 7 7 7 7, 8 8 8 8 8 8 9
the Q1 = (2+2)/2 = 2
Q2 = (4 + 5)/ 2 = 4.5
Q3 = (7 + 8)/2 = 7.5
WILL GIVE BRAINLEST PLEASE!!!!!!!! Jenny has some tiles in a bag. The tiles are of three different colors: purple, pink, and orange. Jenny randomly pulls a tile out of the bag, records the color, and replaces the tile in the bag. She does this 50 times. The results are recorded in the given table: Color of Tile Purple Pink Orange Number of times the tile is drawn 6 18 26 What is the experimental probability that Jenny will pull out a purple tile? fraction 6 over 50 fraction 44 over 50 fraction 6 over 44 fraction 18 over 44
Answer:
6/50
Step-by-step explanation:
There are 50 tiles
6 purple
18 pink
26 orange
P( purple) = purple/ total
= 6/50
A type of related samples design in which participants are observed more than once is called a
A. repeated measures design
B. matched pairs design
C. matched samples design
D. both matched pairs design and matched samples design
Answer:
Option A (repeated measures design) is the correct option.
Step-by-step explanation:
Researchers as well as statisticians vary in terms of methods used mostly for repetitive measurements. Besides illustration, repeated models of measurements are however recognized as repeated analyzes of variance measurements, standardized considerations of measurements, or layouts of objects throughout them.The other three options are not related to the given instance. So that alternative A would be the correct choice.
The following data represents the age of 30 lottery winners.
22 26 27 27 31 34
36 42 43 44 48 49
52 53 55 56 57 60
65 65 66 67 69 72
75 77 78 78 79 87
Complete the frequency distribution for the data.
Age Frequency
20-29
30-39
40-49
50-59
60-69
70-79
80-89
Answer:
Step-by-step explanation:
This is an example of a frequency distribution for a class interval. In order to complete the frequency distribution, we will count the number of data occurring in each group, and write that number as the frequency for that group. This is done as shown below:
Age Frequency ages in class
20-29 4 22, 26, 27, 27
30-39 3 31, 34, 36
40-49 5 42, 43, 44, 48, 49
50-59 5 52, 53, 55, 56, 57
60-69 6 60, 56, 65, 66, 67, 69
70-79 6 72, 75, 77, 78, 78, 79
80-89 1 87
Total 30
Century Roofing is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new warehouse. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)
Question Completion:
WACC = 10.0%
Opportunity cost = $100,000
Net equipment cost (depreciable basis) = $65,000
Straight-line deprec. rate for equipment = 33.333%
Sales revenues, each year = $123,000
Operating costs (excl. deprec.), each year = $25,000
Tax rate = 35%
Answer:
Century Roofing
Project's NPV is: ($6,578)
Step-by-step explanation:
a) Data and Calculations:
WACC = 10.0%
Opportunity cost = $100,000
Net equipment cost (depreciable basis) = $65,000
Straight-line deprec. rate for equipment = 33.333%
Sales revenues, each year = $123,000
Operating costs (excl. deprec.), each year = $25,000
Tax rate = 35%
Cash outflow in year 0 = $165,000 (Opportunity and new equipment costs)
Annual Cash inflow = $123,000 - $25,000 - $34,300 = $63,700
PV of annuity for 3 years at 10% = $158,422 ($63,700 x 2.487)
NPV = Cash inflow minus Cash outflow
= $158,422 - $165,000
= ($6,578)
Negative NPV
b) Since Century Roofing could have realized $100,000 from the sale of the building if it decides not to open the new warehouse, this opportunity cost is factored into the calculation of the Net Present Value. It becomes a present cash outflow. Century Roofing's opportunity cost is defined as the loss of $100,000 being the future return from the best alternative project when it chooses to build the new warehouse instead of selling off the building.