Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

f ion 1. Mali Business is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their

  

f ion 1. Mali Business is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 20 0.10 Moderate response 40 0.30 High response 55 0.40 Very high response 70 0.20 a. Use the risk management tools and estimate the expected value of unit sales for the new product? (5 marks) b. Using the risk management techniques find the standard deviation of unit sales? (5 marks )Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 2. Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net present value profile in comparing the projects. Evaluate the best project using the investment and cash flow patterns given below. Project E ($52,000 Investment) Year 1 2 3 Cash Flow Year 1 14,000 2 24,000 3 Project H ($47,000 Investment) $ 10,000 Cash Flow $ 27,000 19,000 15,000 a. Project E ($52,000 Investment) Year 1 2 3 4 Cash Flow 7 Year $ 10,000 1 14,000 2 24,000 3 31,000 Evaluate the net present value of the projects based on a zero percent discount rate. (4 marks) b. Evaluate the net present val of the projects based on a discount rate of 9 percent. (4 marks) A B I Project H ($47,000 Investment) Note: Do not round intermediate calculations and round your answers to 2 decimal places. C. If the projects are not mutually exclusive, evaluate which project(s) would you accept if the discount rate is 9 percent? (2 marks) E !!! Cash Flow III $ 27,000 19,000 15,000 Ordered list

Step by Step Solution

3.47 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

1 Mail Business a Calculate the expected value of unit sales The expected value is calculated by multiplying each possible sales level by its correspo... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems

Authors: Ulric J. Gelinas, Richard B. Dull

10th edition

9781305176218, 113393594X, 1305176219, 978-1133935940

More Books

Students also viewed these Management Leadership questions

Question

Does the person have her/his vita posted?

Answered: 1 week ago

Question

6. Name three ways a gene could influence alcoholism.

Answered: 1 week ago