Homework: Chapter 13 Homework Save Score: 0 of 1 pt 2 of 6 (0 complete) HW Score: 0%, 0 of 6 pts P13-2 (similar to) Question Help (Related to Checkpoint 13.1) (Forecasting cash flows using the expected value) Koch Transportation is contemplating the acquisition of LH Transport, a hol competing trucking firm. Koch's CFO estimates that during next year LH Transport's cash flows from the acquisition will vary depending on the state of the local economy: a. Calculate the expected cash flow for next year using the estimates provided above. b. Assume the probability of a recession increases to 34 percent, the normal scenario probability remains at 57 percent, and the expansion probability drops to only 9 percent. What is your estimate of the expected cash flow for next year under these circumstances? c. Your analysis of the acquisition suggests that for the investment to have at least a zero NPV, it must produce an annual expected cash flow of $92,970 per year over the next five years. Assuming that the cash flow you estimated in part a is the expected cash flow for Years one through five, what would you like to know about the project cash flows to make you more comfortable with the idea that you can indeed generate the requisite $92,970 per year cash flow? (No computations required.) a. The expected cash flow for the new business is $ - (Round to the nearest dollar.) Data Table Scenario : Scenario II: Recession Normal 23% 57% $(49,000) $152,000 order to copy its contents into a spreadsheet.) Scenario III: Expanding 20% $253,000 Probability Cash flow icon (Clic Print Done Enter your answer in the answer box all ? parts remaining Clear All Check