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linda_us
linda_us, Master's Degree
Category: Multiple Problems
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Experience:  A tutor for Business, Finance, Accounts and other related topics.
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I am in need of help with my FIN 486 Final exam University

Customer Question

Customer: I am in need of help with my FIN 486 Final exam for the University of Phoenix
JA: Thanks. Can you give me any more details about your issue?
Customer: Problem 1Recognizing risk SDED Inc., a public relations firm with net earnings of $3,200,000 in the last year, is considering several projects. Project Initial investment Details A $35,000 Replace existing office furnishings.B 500,000 Purchase digital film-editing equipment for use with several existing accounts.C 450,000 Develop proposal to bid for a $2,000,000 per year 10-year contract with the U.S. Navy, not now an account.D 685,000 Purchase the exclusive rights to market a quality educational television program in syndication to local markets in the European Union, a part of the firm’s existing business activities.The PR business is cyclical and highly competitive. The board of directors has asked you, as chief financial officer, to do the following: 1. Evaluate the risk of each proposed project and rank it “low,” “medium,” or “high.”2. Comment on why you chose each ranking. Problem 2Basic scenario analysis Lee’s Feed is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm’s financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the table on page 488. Project A Project B Initial investment (CF0) $8,000 $8,000 Outcome Annual cash inflows ( CF ) Pessimistic $ 200 $ 900Most likely 1,000 1,000Optimistic 1,800 1,1001. Determine the range of annual cash inflows for each of the two projects. 2. Assume that the firm’ s cost of capital is 10% and that both projects have 20-year lives. Construct a table similar to this for the NPVs for each project. Include the range of NPVs for each project. 3. Do parts a and b provide consistent views of the two projects? Explain. 4. Which project do you recommend? Why? Problem 3Scenario analysis Compudyne Services is considering the purchase of one of two new personal computers, P and Q. The company expects both to provide benefits over a 10-year period, and each has a required investment of $3,000. The firm uses a 10% cost of capital. Management has constructed the following table of estimates of annual cash inflows for pessimistic, most likely, and optimistic results. Computer P Computer Q Initial investment (CF0) $3,000 $3,000 Outcome Annual cash inflows (CF) Pessimistic $ 500 $ 400Most likely 750 750Optimistic 1,000 1,2001. Determine the range of annual cash inflows for each of the two computers. 2. Construct a table similar to this for the NPVs associated with each outcome for both computers.3. Find the range of NPVs, and subjectively compare the risks associated with purchasing these computers.
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Submitted: 11 months ago.
Category: Multiple Problems
Expert:  F. Naz replied 11 months ago.

What is your deadline, thanks.

Customer: replied 11 months ago.
I will need it by Friday December 18th
Customer: replied 11 months ago.
Is that possible?
Expert:  F. Naz replied 11 months ago.

I have sent you the offer, please accept it so the answer may be provided.

Customer: replied 11 months ago.
I would like to counter offer $50
Expert:  F. Naz replied 11 months ago.

Have sent you the new offer, please accept it thanks.

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