Use the following information for questions 1 to 3. ...
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Finance
| Use the following information for questions 1 to 3. | ||||
| Cumnock Corporation (CC) is estimating cash flows from a new product for the next year. The cash flow generated by the new product sales is uncertain. | ||||
| It has estimated the following probability distribution of after-tax cash flows from these sales for the next year: | ||||
| Possible State | Probability | After-tax Cash Flow | ||
| 1 | 0.2 | $9,000 | ||
| 2 | 0.3 | $12,000 | ||
| 3 | 0.5 | $15,000 | ||
| Use the above information to answer the following questions. The tax rate is 35% | ||||
| What is the expected value of the after-tax cash flows from the new design? What is the standard deviation of the after-tax cash flows? What is the coefficient of variation of after-tax cash flows? | ||||
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