"STATISTICAL PROBABILITY, EXPECTATION. If a certain event is known to happen SUCCESS# times in NTRIALS occurrences from empirical observations then it is considered to have STATISTICAL probability of SUCCESS#/NTRIALS of being successful. If SUCCPROB is the probability of receiving a SUM$, then SUCCPROB*SUM$ is its expectation EXPECT$. If money earns a simple annual rate of ANNRATE% with a compounding period CMPERIOD in months, CMPERIOD=1 for monthly, =3 for quarterly, =6 for semiannually, =12 for yearly. then PRESVALU is the present value of the expectation EXPECT$ in NUMYEARS from today. EFFRATE% is the effective or yearly rate percent for money. *** Answers to problems *** (c) Copyright PCSCC Inc., 1993 (a) Set ANNRATE%=7, CMPERIOD=12, NUMYEARS=4, SUCCPROB=.12, SUM=10,000. The present value is PRESVALU=$915.47. The government should invest $915.47 at 7% to cover its future obligation to Mr. Souza. Type any key to exit. ||From studies of graduation records at ACME Tech, it was found that over the last 30 years, the probability that an accepted veteran student will graduate 4 years later is 0.12. The government has promised Mr. Souza, a veteran, a $10,000 bonus upon his graduation 4 years from today. (a) If money is worth 7%, find the value of his $10,000 expectation today. Type comma key to see answers. Type (F2) to return to helpfile."
