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In: Finance
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity...
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity of its aerobics dancing. The equipment will cost $20,900. Debby is not sure how many members the new equipment will attract, but she estimates that her increased annual cash flows for each of the next five years will have the following probability distribution. Debby’s cost of capital is 15 percent. Probability Cash flow 0.1 $4,570 0.3 5,550 0.4 7,400 0.2 9,930 a. What is the expected cash flow? Expected cash flow $ b. What is the expected NPV? (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) NPV $ c. Should Debby buy the new equipment? Yes No
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity...
Debby’s Dance Studios is considering the purchase of new sound
equipment that will enhance the popularity of its aerobics dancing.
The equipment will cost $24,400. Debby is not sure how many members
the new equipment will attract, but she estimates that her
increased annual cash flows for each of the next five years will
have the following probability distribution. Debby’s cost of
capital is 14 percent. Use Appendix D for an approximate answer but
calculate your final answers using the...
Debby’s Dance Studios is considering the purchase of new sound equipment that will enhance the popularity...
Debby’s Dance Studios is considering the purchase of new sound
equipment that will enhance the popularity of its aerobics dancing.
The equipment will cost $33,600. Debby is not sure how many members
the new equipment will attract, but she estimates that her
increased annual cash flows for each of the next five years will
have the following probability distribution. Debby’s cost of
capital is 11 percent. Use Appendix D for an approximate answer but
calculate your final answers using the...
Herrera Music is considering the sale of a new sound board used in recording studios. The new...
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Cusic Music Company is considering the sale of a new sound board
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Cusic Music Company is considering the sale of a new sound board used in recording studios....
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Cusic Music Company is considering the sale of a new sound board used in recording studios....
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A company is considering purchasing new equipment. The purchase of the equipment is expected to...
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HT Tool Co is considering the purchase of a new CNC milling machine to enhance the...
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