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A project has an expected net present value of $50,000 with a standard deviation of the...

A project has an expected net present value of $50,000 with a standard deviation of the net present value of $20,000. Assume that NPV is normally distributed. What is the probability that the project will have a negative NPV?

Please show me how to do it with a TI-83 calculator step by step.

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Answer #1

This question can be solved using NormCDF function.

On both the TI 84 and TI 83, NormCDF is in the same place:

  1. Press the 2nd key.
  2. Press VARS .
  3. Scroll to option 2—or just press “2”— for “normalcdf.”

We have to use -1000 (or any other large negative number) in place of negative infinity for lower bound.

normalcdf(-1000, 0, 50000, 20000) = 0.00621

Please do rate me and mention doubts, if any, in the comments section.

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Answer #2
-1000,0,50000,20000= 0.00621
source: Here
answered by: Ree
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