STATISTICS & PROBABILITY

PERFORMANCE TASK #1 – RANDOM VARIABLES & PROBABILITY MASS

FUNCTION

Feasibility Report
Purpose
The aim of this feasibility report is to use in making a business decision of
purchasing a new machine. As the plans of company which is for expansion and is
planning to purchase a new machine that will aid productivity, it is needed for the
financial analyst to examine whether the purchase will be a good decision
considering the sales of the company for the past four years. At the end of this
report, the decision will be made if purchasing new machine is good for the
company.

Scope
The data gathered is limited only to the monthly income of the company for
the past four years. A financial analyst will only focus on historical data which are the
monthly income of the company. This will show the probabilities that the company
will lost or good for the purchase of new machine.

Historical Data

Let x be the monthly income of the company for the last four years.

Monthly Income of the Company (x) P(x)

₱4,000,000 0.12
₱5,000,000 0.21
₱6,000,000 0.15
₱7,000,000 0.20
- ₱3,500,000 0.32

From this table we can get the following values

 P(X = 4,000,000) = 0.12

P(X = 5,000,000) = 0.21

P(X = 6,000,000) = 0.15

P(X = 7,000,000) = 0.20

P(X = 3,500,000) = 0.32

Probability Histogram

Probability Distribution of Monthly Income of

P(x)
the company for the last four years

Monthly Income of the Company for the last four years

The graph shows the monthly income of the company for the past four years.
As we can see, it shows that ₱3,500,000 monthly income has the highest probability
which means it has a 0.32 or 32% chance that the company will lost this number of
amount for purchasing new machine.
 Computation

x P(x) (x ) (P(x)) x-µ (x-µ)^2 (x-µ)^2 * P(x)

₱4,000,000 0.12 ₱480,000 ₱1,290,000 ₱1,664,100,000,000 ₱199,692,000,000
₱5,000,000 0.21 ₱1,050,000 ₱2,290,000 ₱5,244,100,000,000 ₱1,101,261,000,000
₱10,824,100,000,00
₱6,000,000 0.15
₱900,000 ₱3,290,000 0 ₱1,623,615,000,000
₱18,404,100,000,00
₱7,000,000 0.2
₱1,400,000 ₱4,290,000 0 ₱3,680,820,000,000
₱38,564,100,000,00
-₱3,500,000 0.32
-₱1,120,000 -₱6,210,000 0 ₱12,340,512,000,000

Mean= ₱2,710,000 Variance= ₱18,945,900,000,000

µ= ₱2,710,000

2
σ =¿₱18,945,900,000,000

Standard Deviation:

σ =√ σ 2

σ =√ ₱ 18,945,900,000,000

σ =₱ 4,352,688.82

Conclusion

The values of x are ₱4,000,000, ₱5,000,000 , ₱6,000,000 , ₱7,000,000 ,

₱3,500,000 and the mean or expected value is ₱2,710,000. Thus, the values of X
are near to its mean which means that very likely. As we can see, it shows that
₱3,500,000 monthly income has the highest probability which means it has a 0.32 or
32% chance that the company will lost this number of amount for purchasing new
machine. The mean of a monthly income for the last four years may be interpreted
as the average of the values assumed by the random variable in repeated trials of
the experiment. The variance and standard deviation of the monthly income of the
company for the last four years may be interpreted as measures of the variability of
the values. Also, it is a way to measure how far a set of numbers is spread out. The
variance is ₱18,945,900,000,000 and the standard deviation is ₱ 4,352,688.82 . We
can observe that the variance is high which indicates that the data points are very
spread out from the mean, and from one another.