Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 13

Carla is a statistician with a bank. She has collected debt-to-equity mix data on mature ( M ) and young ( Y ) companies. The debt percentages vary from 20% to 80% in her sample. Carla has defined D m as a variable for the mature companies from 0 to 1, with D m = 0 interpreted as the low of 20% debt and D M = 1.0 as the high of 80% debt. The variable for young corporation debt percentages D y is similarly defined. The probability distributions used to describe D M and D Y are
a) Use different values of the debt percentage between 20% and 80% to calculate values for the probability distributions and then plot them. b) What can you comment about the probability that a mature company or a young company will have a low debt percentage A high debt percentage