Allisons Dresswear Manufacturers is preparing a strategy for the fall season One alternative is to expand its traditional ensemble of wool sweaters A second option would be to enter the cashmere sweater market with a new line of high quality designer label products The marketing department has determined that the wool and cashmere sweater lines offer the following probability of outcomes and related cash flows Expand Wool Sweaters Line Enter Cashmere Sweaters Line Expected Sales Probability Present Value of Cash Flows from Sales Probability Present Value of Cash Flows from Sales Fantastic 0 3 $ 258,000 0 3 $ 394,000 Moderate 0 5 165,000 0 2 263,000 Low 0 2 89,300 0 5 0 The initial cost to expand the wool sweater line is $137,000 To enter the cashmere sweater line, the initial cost in designs, inventory, and equipment is $131,000 a Calculate net present value if, Allisons Dresswear Manufacturers decides to

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Allisons Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option

Allisons Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option would be to enter the cashmere sweater market with a new line of high-quality designer label products. The marketing department has determined that the wool and cashmere sweater lines offer the following probability of outcomes and related cash flows.

	Expand Wool Sweaters Line				Enter Cashmere Sweaters Line
Expected Sales	Probability		Present Value of Cash Flows from Sales		Probability		Present Value of Cash Flows from Sales
Fantastic		0.3	$	258,000		0.3	$	394,000
Moderate		0.5		165,000		0.2		263,000
Low		0.2		89,300		0.5		0

The initial cost to expand the wool sweater line is $137,000. To enter the cashmere sweater line, the initial cost in designs, inventory, and equipment is $131,000. a. Calculate net present value if, Allisons Dresswear Manufacturers decides to: