al Management - Second X + iz/attempt.php?attempt462498.cmid=28802 Resize animated GIF G digital marketing | New Tab British Council IELTL Degree Programs G Good Luck Google Administrative Hum ms Flag question Consider two possible forecasts, each of which has an equal chance of being realized. Under assumption #1, diesel prices will stay relatively low, under assumption #2, diesel prices will rise considerably. The 75 new trucks will cost the firm $5 million Depreciation will be 24.62% in year 1, 38.13% in year 2 and 36.66% in year 3. The firm is in a 40% income tax bracket and uses a 10% cost of capital for cash flow valuation purposes. Interest on debt is ignored. In addition, consider the following forecasts: Forecast for assumption #1 low fuel prices): Prob. (same for each year) Year 1 Price of Diesel Fuel per Gallon Year 2 $0.93 Year 3 0.1 $0.B $1.01 0.2 $0.99 $1.12 $1.1 $1.31 0.3 $1.1 $1.22 0.2 $1.48 $1.3 $14 $1.44 $1.59 02 $1.55 Forecast for assumption #2 (high fuel prices): Price of Diesel Fuel per Gallon Year 1 Prob. (same for each year) Year 2 Year 3 0.1 $1.5 $1.72 $121 $1.33 0.3 $1.72 $2.01 $2.51 0.4 $1.81 $2.23 $2.32 $2.51 $2.81 0.2 Required: Calculate the percentage change on the basis that an increase would take place from the NPV under assumption to the probability weighted (expected) NPV % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%) Note: The educational purpose of this problem targets the students' ability to read + follow instructions 9 O a HP Pavilion All-in-One BRING HOME FASHIONABLE DESIGN al Management - Second X + iz/attempt.php?attempt462498.cmid=28802 Resize animated GIF G digital marketing | New Tab British Council IELTL Degree Programs G Good Luck Google Administrative Hum ms Flag question Consider two possible forecasts, each of which has an equal chance of being realized. Under assumption #1, diesel prices will stay relatively low, under assumption #2, diesel prices will rise considerably. The 75 new trucks will cost the firm $5 million Depreciation will be 24.62% in year 1, 38.13% in year 2 and 36.66% in year 3. The firm is in a 40% income tax bracket and uses a 10% cost of capital for cash flow valuation purposes. Interest on debt is ignored. In addition, consider the following forecasts: Forecast for assumption #1 low fuel prices): Prob. (same for each year) Year 1 Price of Diesel Fuel per Gallon Year 2 $0.93 Year 3 0.1 $0.B $1.01 0.2 $0.99 $1.12 $1.1 $1.31 0.3 $1.1 $1.22 0.2 $1.48 $1.3 $14 $1.44 $1.59 02 $1.55 Forecast for assumption #2 (high fuel prices): Price of Diesel Fuel per Gallon Year 1 Prob. (same for each year) Year 2 Year 3 0.1 $1.5 $1.72 $121 $1.33 0.3 $1.72 $2.01 $2.51 0.4 $1.81 $2.23 $2.32 $2.51 $2.81 0.2 Required: Calculate the percentage change on the basis that an increase would take place from the NPV under assumption to the probability weighted (expected) NPV % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%) Note: The educational purpose of this problem targets the students' ability to read + follow instructions 9 O a HP Pavilion All-in-One BRING HOME FASHIONABLE DESIGN