Question: suppose the lifetime of a particular machine is uniformly distributed...
Question details
Suppose the lifetime of a particular machine is uniformly
distributed on the set [0,24].
a) What is the expected lifetime of one of these
machines?
b) If one of these machines produce, approximately, 32000 profit
per year, then what is the total expected profit from one of these
machines (assume no interest)?
c) If we assume, approximately, an effective annual interest rate
of 0.03, then what is the present value of the expected profit from
one of these machines?
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