I'm trying to intuit the following statements based on the plot below, but I'm stuck on the third one. I'd appreciate an explanation to clear up my thinking:
- What NPV (net present value) can be expected with 80% chance of success
In this case I would read off from the 20 % cumulative probability, as there is an 80 per cent chance of a greater value.
- What NPV can be expected with 100% chance of success
In this case I would read off from the 0 % cumulative probability, as there is a 100 per cent chance of a greater value.
- What NPV can be expected with 10% chance of success
In this case I would read off from the 90 % cumulative probability, as there is a 10 % chance of a greater value.
Where I get stuck in case 3 is the fact that the discrete probability shows a ~10% chance of a value at -1.6... so isn't there a 10% chance of getting an NPV value here as well, other than those that occur if I read off from the 90% cumulative probability? Perhaps it's the case that I need to state "What is the greatest NPV that can be expected with a 10% chance?"
