Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. problem 13-16(algo) expected value with net presen

Problem 13-16(Algo) Expected value with net present value [LO13-1] Debby's Dance Studios is...

50.1K

Verified Solution

Question

Accounting

Problem 13-16(Algo) Expected value with net present value [LO13-1]
Debby's Dance Studios is considering the purchase of new sound equipment that will enhance the popularity of its aerobics dancing The equipment will cost $25,000. Debby is not sure how many members the new equipment will attract, but she estimates that her Increased annual cash flows for each of the next five years will have the following probability distribution. Debby's cost of capital is 11 percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods.
\table[[Cash Flow,Probability],[$3,600,0.2],[5,000,0.3],[7,480,0.4],[9,800,0.1]]
a. What is the expected value of the cash flow? The value you compute will apply to each of the five years.
b. What is the expected net present value?
Note: Negative amount should be Indlcated by a minus sign. Do not round Intermedlate calculatlons and round your answer to 2 decimal places.
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

Pertaining to the titration of 25.0mL of 0.100 M HCN (Ka=6.2x10-10) with 0.200 M NaOH, calculate...

Physics
1.2K views

projectile motion with wind force derive the math model adding in a wind force function, w(t), acting...

Advance Math
1.2K views

Exercise 4.8. For each of the following, state whether it is true or false. If true, prove....

Biology
1.2K views

Examine the diagram below O C fragmentation fission 1 soviel reproduction Process A Ciliates are...

Basic Math
1.2K views

Let A = f(r) be the area of a circle with radius r and r...

Statistics
1.2K views

ces Required 1 Required 2 Prepare a petty cash payments report for February with these...

Algebra
1.2K views

How many years will it take for $1,200 to double if your compound interest rate...

Accounting
1.2K views

please give me the answers of these questions ASAP. Financial information for American...

Accounting
1.2K views

Please answer ALL parts! And show ALL work please! 191. PQR Corp begins operations...

Accounting
1.2K views

Please help. Thank you. International Case 12-3 Comparison of equity method between...

Accounting
1.2K views

Kyoto Joe, Incorporated, sells earnings forecasts for Japanese securities. Its credit terms are 1/30, net...

Finance
1.2K views

Consider the following two mutually exclusive projects: ...