A recent sensitivity analysis of a public works project indicates that the expected present worth is $83,000. If there is a 20% chance that the PW will be the pessimistic one of $45,000 and 50% chance that it will be the most likely one of $72,000, the optimistic PW is closest to: (choose one)
(a) $89,520
(b) $118,380
(c) $126,670
(d) $138,540
83,000 = 45,000(0.2) + 72,000(0.5) + PWopt(0.3)
PWopt = [83,000 - 45,000(0.2) - 72,000(0.5)]/0.3
= $126,667
Answer is (c) $126,670
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