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The following questions relate to Plants Inc. which operates under ideal conditions with the following circumstances: Operates a single fixed asset with a two year
The following questions relate to Plants Inc. which operates under ideal conditions with the following circumstances:
- Operates a single fixed asset with a two year useful life
- Fixed asset will have no value after two ears and no disposal costs
- Interest rate economy wide is 10%
- The fixed asset will generate $500 if it is sunny (good) and $200 if it is cloudy (bad)
- There is a 75% chance that it will be sunny (good), and 25% chance that it will be cloudy (bad).
- what are the total assets on plant's balance sheet at the end of year 1 if its cloudy (bad)?
- what are the total assets on plant's balance sheet at the end of year 2 if it is cloudy(bad in year 1 and sunny (good) in year 2?.
- What is net income in year 2 if it is sunny (good) in year 2 and cloudy (bad) in year 1?
- What Is the amortization of the fixed asset in year 2 if it is sunny (good) in year 2 and cloudy (bad) in year 1?
- What is shareholders equity at the end of year 2 if it is cloudy (bad) in year 1 and sunny (good) in year 2?
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