1 answer

A cash flow of $500,000 may be received by Cynthia Bennett Company in one year, two...

Question:

A cash flow of $500,000 may be received by Cynthia Bennett Company in one year, two years, or three years, with probabilities of 30%, 50%, and 20%, respectively. The rate of interest on default risk-free investments is 8%. Required: What is the expected present value of Cynthia Bennett' cash flow? Round your answers to the nearest whole dollar. With details please.


Answers

Year 1 = $500,000 x 30% x PV(8%,1) $ 1,38,888.89
Year 2 = $500,000 x 50% x PV(8%,2) $ 2,14,334.71
Year 3 = $500,000 x 20% x PV(8%,3) $    79,383.22
Total Cash Flow $ 4,32,607
Year 1 = $500,000 x 30% x PV(8%,1) =PV(8%,1,0,-(500000*30%))
Year 2 = $500,000 x 50% x PV(8%,2) =PV(8%,2,0,-(500000*50%))
Year 3 = $500,000 x 20% x PV(8%,3) =PV(8%,3,0,-(500000*20%))
Total Cash Flow =SUM(B3:B5)
.

Similar Solved Questions

1 answer
When answering all questions please Provide evidence of critical thinking and problem- solving techniques: & Reference...
When answering all questions please Provide evidence of critical thinking and problem- solving techniques: & Reference answers using examples in the current clinical setting When thinking about the forces that are changing healthcare, what are some ways that nurses could take advantage of eme...
1 answer
10 pts Question 3 a) Explain the reason why heat is released when a hydrocarbon fuel...
10 pts Question 3 a) Explain the reason why heat is released when a hydrocarbon fuel is burned in a combustion chamber. b) Why excess alr is necessary to use in an actual combustion? Explain. c) n - Dodecane (C12H%) in gas form is burned in a combustion chamber with 150% excess air. Determine the fo...
1 answer
(1 point) Solving a system of linear ODEs with constant coefficients: Consider the system of equations...
(1 point) Solving a system of linear ODEs with constant coefficients: Consider the system of equations x' = 3x – 2y y = 4x – 3y = -5x + 4y + 2z, with initial conditions x(0) = 1, y(0) = 2, 2(0) = 0. The matrix of the system is 13 -20 A= | 4 -3 0 1-5 4 2) and defining the column vecto...
1 answer
3. The figure below shows the radius of revolution as a function of inverse magnetic field...
3. The figure below shows the radius of revolution as a function of inverse magnetic field for a particle accelerated through a potential dierence of 10 kV. Find g/m and try to identify the particle. 12 1.0 0.e 04 0.2 08...
1 answer
Luke Corporation produces a variety of products, each within their own division. Last year, the managers...
Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $6.00 per case, has not had the market success that managers expected and...
1 answer
A four-resistor circuit is shown in the figure. The values of the resistors are as follows:...
A four-resistor circuit is shown in the figure. The values of the resistors are as follows: R1=10 Ohms, R2=R3=6 Ohms, R4=2 Ohms. What is the equivalent resistance Req for this circuit? 0.50 ohms 2.00 ohms 3.33 ohms 5.25 ohms 7.50 ohms R4 M R1 R2 R3...
1 answer
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): $21,200 12,400 Sales Variable expenses Contribution margin Fixed expenses 8,800 6,952 $ 1,848 Net operating income Required:...
1 answer
Three point charges are located on a circular arc as shown in the figure below. (Let...
Three point charges are located on a circular arc as shown in the figure below. (Let r = 4.32 cm. Assume that the +x-axis is to the right and the +y-axis is up along the page.) (a) What is the total electric field at P, the center of the arc? (b) Find the electric force that would be exerted on a...
1 answer
Three nursing careplans for a newborn whos mother has hepatitis c.
three nursing careplans for a newborn whos mother has hepatitis c....
1 answer
Create a program that will use the attached input file and perform the following operations. Read...
Create a program that will use the attached input file and perform the following operations. Read the file into an appropriate JCF data structure. Look up a (list of) names and numbers matching a last name or the first letters of a last name, ignoring case. Look up a (list of) names and numbers matc...
1 answer
Discuss the arguments for and against the use of equity accounting for joint venture operations.
Discuss the arguments for and against the use of equity accounting for joint venture operations....
1 answer
Try yourself 9.1 Kiln-dried solid grade A teak wood should have a moisture content of no...
Try yourself 9.1 Kiln-dried solid grade A teak wood should have a moisture content of no more than 12%. A furniture company recently purchased a large shipment of this wood for use in constructing dining room sets. Thirty-seven pieces of teak wood were randomly selected and carefully measured for mo...
1 answer
Pick a topic related to nutrition that you are interested in, and write a 2-4 paragraph...
Pick a topic related to nutrition that you are interested in, and write a 2-4 paragraph post...
1 answer
Journal T Accounts Unadjusted Trial Balance Final Questions On January 1, 2019, Sharon Matthews ostablished Tri-City...
Journal T Accounts Unadjusted Trial Balance Final Questions On January 1, 2019, Sharon Matthews ostablished Tri-City Realty, which completed the following transactions during the month: Jan. 1 Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $4...
1 answer
Please write out answer do not use excel please. Your company is considering expanding operations and...
please write out answer do not use excel please. Your company is considering expanding operations and buying a new machine to handle the increased volume. The machine's basic price is $100,000, and it will cost another $15,000 to modify it for special use by your firm. The machine falls into the...
1 answer
Describe the Ranked Sequence ADT (give a definition, set of operations). Compare the array-based and the...
Describe the Ranked Sequence ADT (give a definition, set of operations). Compare the array-based and the doubly linked list implementation of the Ranked Sequence ADT. Please write alot do note give me code. Just give me a indepth explination. PLease...