4 9% 5 Homework on Chapters 10 and 13 California Health Center, a for-profit hospital, is evaluating the purchase of a new diagnostic equipment, which costs $600,000 and has an expected life of five years. Average investments in inventory and accounts receivable will be $50,000 and $100,000 respectively, while the average accounts payable balance will be $40,000. The expected before tax salvage value of the equipment after five years'use is $50,000. The equipment will produce an annual revenue of $350,000 each year in years 1-3, and $450,000 in years 4 and 5 All costs excluding depreciation: 41% of revenue Tax rate: 21% Depreciation method: MACRS Year Depreciation 1 2096 32% 3 1996 12% 5 12% 6 5% Calculate the following A Initial investment Operating cash flows c Terminal cash flows Project's TV, asumings required rate of 7% 7 You are provided the following information on a 100 a stock's annual retums Calculate the stock's standard deviation of return Return