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Sega Inc. is considering expanding its operations into computer-based lacrosse games. Sega feels that there is a 3 year life associated with the project, and it will initially involve an investment of $100,000. It also believes that there is a 60% chance of success and a cash flow of $100,000 in year 1 and a 40% chance of failure and a $10,000 cash flow in year 1. If the project fails in year 1, there is a 60% chance that it will produce cash flow of only $10,000 in years 2 and 3. There is also a 40% chance that it will really fail and Sega will earn nothing in year 2 and get out of this line of business, with the project terminating and no cash flow occurring in year 3. If conversely, this project success in the first year, then cash flows in the second year are expected to be $200,000, $175,000 or $150,000 with probabilities of 30%, 50% and 20% respectively. Finally, the cash flows in the 3rd and final year of operation are expected to be either $30,000 more or $20,000 less than they were in year 2, with an equal chance of occurrence. a)Construct the decision tree representing the possible outcomes. b)Determine the joint probability of each possible sequence of events. Show your work. c)Determine the IRR of each possible sequence of events. d)What is the expected IRR for this project? Show your work. e)What is the standard deviation of the IRR for this project? Show your work.
Griff's property tax is $670.64 and is due April 10. He does not pay until June 21. The county adds a penalty of 7.5% simple interest on unpaid tax. Find the penalty Griff will pay. (Assume there are 365 days in a year.)
Delta Distributors has an investment in accounts receivable of $2,750,000. Daily credit sales are $118,280. If 30 percent of Delta's credit customers receive a discount by paying within ten days and the remainder of Delta's consumers pay in 40 days.
Describe Decision for submission on Bid Price and install the equipment necessary to start production of the screws
What would you estimate is the difference between the inflation rates of the United States and Japan? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.
The tax rate is 34 percent. The sales price is estimated at $7.50 a unit, plus or minus 4 percent. What is the operating cash flow for a sensitivity analysis using total fixed costs of $31,000?
Baldwin has a tax rate of 35%. If the asset is sold at the end of four years for $5,000, what is the after-tax cash flow from disposal?
Which of the following statements about acceptance sampling is true
State the American Society for Quality’s definition of quality. Of the three "flavors" or categories of quality definitions, which type is it? Explain.
Illustrate out the primary functions of foreign exchange market. Who are the participants in the market? How do global companies use the foreign exchange market to hedge against foreign exchange risks?
how are the members of the board of directors of a corporation chosen and to whom do these board members owe their
Explain Capital budgeting involves calculation of net present value and What is this project's internal rate of return
Assume that the firm has a tax rate of 35 percent. Compute the cash flows to investors from operating activity. (Round answer to 2 decimal places, e.g. 15.25.)
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