Cost before upgrade Cost after upgrade Year of upgrade

2000 0.1 1200 0.1 5 0.1 0.5

3000 0.5 2500 0.3 10 0.2 2
5000 0.4 3000 0.4 15 0.3 4.5
E(A) 3700 5000 0.2 20 0.3 6
E(B) 3070 25 0.1 2.5
Variance(A) E(U) 15.5
-1700 289000 Variance(B)
-700 245000 -1870 349690 Variance(U)
1300 676000 -570 97470 -10.5 11.025
V(A) = 1E+06 -70 1960 -5.5 6.05
SD(A) = 1100 1930 744980 -0.5 0.075
V(B) = 844410 4.5 6.075
SD(B) = 918.9 9.5 9.025
V(U) = 32.25
SD(U) = 5.68

Normal Distribution Mean = 903870

SD = 219996

Risk of under-quote
Quote Prob. Risk
900000 49.3% 50.7%
910000 51.1% 48.9%
920000 52.9% 47.1%
930000 54.7% 45.3%
940000 56.5% 43.5%
950000 58.3% 41.7%
960000 60.1% 39.9%
970000 61.8% 38.2%
980000 63.5% 36.5%
990000 65.2% 34.8%
1000000 66.9% 33.1%
1010000 68.5% 31.5%
1020000 70.1% 29.9%
1030000 71.7% 28.3%
1040000 73.2% 26.8%
1050000 74.7% 25.3%
1060000 76.1% 23.9%
1070000 77.5% 22.5%
1080000 78.8% 21.2%
1090000 80.1% 19.9%
1100000 81.4% 18.6%
1110000 82.6% 17.4%
1120000 83.7% 16.3%
1130000 84.8% 15.2%
1140000 85.8% 14.2%
1150000 86.8% 13.2%
1160000 87.8% 12.2%
1170000 88.7% 11.3%
1180000 89.5% 10.5%
1190000 90.3% 9.7%
1200000 91.1% 8.9%
1210000 91.8% 8.2%
1220000 92.5% 7.5%
1230000 93.1% 6.9%
1240000 93.7% 6.3%
1250000 94.2% 5.8%
1260000 94.7% 5.3%
1270000 95.2% 4.8%
1280000 95.6% 4.4%
1290000 96.0% 4.0%
1300000 96.4% 3.6%
1310000 96.8% 3.2%
1320000 97.1% 2.9%
1330000 97.4% 2.6%
1340000 97.6% 2.4%
1350000 97.9% 2.1%
1360000 98.1% 1.9%
1370000 98.3% 1.7%
1380000 98.5% 1.5%
1390000 98.6% 1.4%
1400000 98.8% 1.2%
1410000 98.9% 1.1%
Cost of upgrade Year FW(cost) Values at 1 SD
10000 0.1 1000 0 3700 0
20000 0.2 4000 1 4070 1
30000 0.2 6000 2 4477 2
40000 0.2 8000 3 4925 3
50000 0.3 15000 4 5417 4
34000 5 5959 5
6 6555 6
Variance(P) 7 7210 7
-24000 57600000 8 7931 8
-14000 39200000 9 8724 9
-4000 3200000 10 9597 10
6000 7200000 11 10557 11
16000 76800000 12 11612 12
V(P) = 184000000 13 12773 13
SD(P) = 13564.66 14 14051 14
15 15456 15
Year of upgrade 16 14107 16
17 15517 17
18 17069 18
19 18776 19
20 20653 20
21 22719 21
22 24991 22
23 27490 23
24 30239 24
25 33263 25
26 36589 26
27 40248 27
28 44272 28
29 48700 29
TOTAL FW 527645 683874 TOTAL FW+SD
SD =
 4800
5280
5808
6389
7028
7730
8503
9354
10289
11318
12450
13695
15064
16571
18228
20051
18329
20162
22178
24396
26835
29519
32471
35718
39290
43219
47541
52295
57524
63277
685311 903870
219996