Question 1 (10 points) Southern Belle plans to manufacture boat motors. Sales will be dependent on the length of the summer season. Southern Belle operates under ideal conditions of uncertainty. On January 1, 2020, Southern Belle started operations by acquiring the necessary equipment which will last 2 years at which time there will be no salvage value. Southern Belle financed the equipment purchase through a $950,000 bank loan at a 8% interest rate and the balance was financed through the issuance of common shares. Southern Belle's annual net cash flows will be $1,350,000 if the summer remains hot for 12 weeks and $600,000 if the summer is warm for 6 weeks. Assume that the cash flows are received at year- end. In each year the objective probability that the summer is hot for 12 weeks is 65% and warm for 6 weeks 35%. The interest rate in the economy is 8% in both years. Southern Belle will pay a dividend of $110,000 at the end of each year of operations. Assume that in 2020 that the season is hot for 12 weeks. Instructions: Enter all numbers without dollar signs. Round numbers to the nearest whole dollar do not enter any decimals in your number. Use commas properly. If the amount is zero, enter 0, do not leave any answers blank. If the number is negative put the number in brackets with no spaces. For example, a properly formatted number is 125,250 and a negative number would be (140,890). Numbers incorrectly formatted with not result in any marks. Part A Calculate the present value of the equipment on January 1, 2020. The present value is Part B Determine the following items that would appear on the December 31, 2020 financial statements: Cash Question 1 (10 points) Southern Belle plans to manufacture boat motors. Sales will be dependent on the length of the summer season. Southern Belle operates under ideal conditions of uncertainty. On January 1, 2020, Southern Belle started operations by acquiring the necessary equipment which will last 2 years at which time there will be no salvage value. Southern Belle financed the equipment purchase through a $950,000 bank loan at a 8% interest rate and the balance was financed through the issuance of common shares. Southern Belle's annual net cash flows will be $1,350,000 if the summer remains hot for 12 weeks and $600,000 if the summer is warm for 6 weeks. Assume that the cash flows are received at year- end. In each year the objective probability that the summer is hot for 12 weeks is 65% and warm for 6 weeks 35%. The interest rate in the economy is 8% in both years. Southern Belle will pay a dividend of $110,000 at the end of each year of operations. Assume that in 2020 that the season is hot for 12 weeks. Instructions: Enter all numbers without dollar signs. Round numbers to the nearest whole dollar do not enter any decimals in your number. Use commas properly. If the amount is zero, enter 0, do not leave any answers blank. If the number is negative put the number in brackets with no spaces. For example, a properly formatted number is 125,250 and a negative number would be (140,890). Numbers incorrectly formatted with not result in any marks. Part A Calculate the present value of the equipment on January 1, 2020. The present value is Part B Determine the following items that would appear on the December 31, 2020 financial statements: Cash