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(Solved) Please type your numeric answers in the spaces below. Thank you and good luck. 1. Possible net present values and associated probabilities for a new


Need help answering the 3 questions on the attached document. Thanks for your help!

Please type your numeric answers in the spaces below. Thank you and good luck.
1. Possible net present values and associated probabilities for a new investment are as follows:
NPV ­1200 ­980 80
450
550
800
Probability
.15
.30
.20
.10
.10
.15
What is the expected value______________, median,______________ and mode _________________? 2. Teresa’s Tanning Salon expects annual sales of $175,000, annual fixed cash outlays are $57,000 a year at each location, variable cash outlays are 25 percent of sales, depreciation is $15,000 per year, and taxes are 32% (of pretax income). Initial
outlay for the building is $440,000. The company does its analysis based on a 10-year store life. We believe the business
can be sold for $500,000 after taxes (disposal value) at the end of its 10 year lifer. Using an 8% required return, what is the
net present value of this venture? 3. Please rework the prior problem to determine what annual sales volume is needed to generate a net present value of $0? To
do this you will need to review the problem in the book and its excel answer. If you do not know how to do a goal seek in
excel please consult the help menu or google or other sources (there are many). Remember -- you will need to calculate the
net present value in the traditional way first. When you do this you need to make sure that the second year sales references
the first year ( plus “first year” in the formula) You will then need to click on the data tab to access the“what if” box and
then click on the goal seek box. To use this function, you will set the “npv” cell to zero by changing the sales cell in the
first year.

 


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