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cross-posted from https://math.stackexchange.com/questions/3326309/what-value-to-expect-with-x-success

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:

  1. What NPV 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.

  1. 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.

  1. 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?"

enter image description here

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  • $\begingroup$ When you look at the -1.6 bar, you are looking at the wrong end of the graph. Instead you have to add up the bars at 24.6, 20.2, etc. until they add up to 10%. $\endgroup$ – Alex C Aug 19 at 2:31

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