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 $15,800. 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 13 percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods. Probability 0.5 Cash Flow 53,650 5,490 7,960 9,950 a. What is the expected value of the cash flow? The value you compute will apply to each of the five years. Expected cash flow b. What is the expected net present value? (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answer to 2 decimal places.) b. What is the expected net present value? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value c. Should Debby buy the new equipment? No Yes Appendix D Present value of an annuity of $1. PVC PV = A 0962 0.952 0.926 0.980 1.942 0.943 1.833 2.673 3.465 4.212 4.917 5.582 0.935 1.808 2.624 3.387 4.100 4.767 5.389 6.210 5.971 N 0.990 1.970 2.941 3.902 4853 5795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25 808 32835 39.196 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 0.971 1.913 2.829 3.711 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17413 19.600 23.115 25.730 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 19.793 21.482 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10:380 10.838 11.274 11.690 12.085 12.462 14.094 15.372 17.159 18.256 6.802 7.360 7887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 12.783 13.765 15.046 15.762 6.515 7.024 7.499 7.943 8.358 8.745 9.108 9.447 9.763 10.059 10.336 10.594 11.654 12 409 13.332 13.801 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 9% 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10757 10.962 10% 11% 0.909 0.901 1.736 1.713 2.487 2444 3.170 3.102 3.791 3696 4.355 4.231 4.868 4.712 5.335 5.146 5.759 5537 6.145 5889 6.4956.207 6.814 6.492 7.103 6.750 7.367 6.982 7.606 7.191 7.824 7379 8.022 7.549 8.201 7.702 8.365 7.839 8.514 7.963 9.077 8.422 9.427 9.779 9.951 9.915 9.042 0.893 1690 2.402 3037 3.605 4.111 4564 4.968 5.328 5.650 5938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.843 8055 8 244 8.304 10 675 AHR8 11.258 11.925 12.233 Copyright 2019 Meira Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Merawat ducati