Please provide step-by-step solution The Angel Investor, that is investing a mil

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Please provide step-by-step solution

The Angel Investor, that is investing a million dollars, has asked for some further information. Two scenarios are of interest that concern the revenues effect on the ending cash flow amounts during the five years. The two scenarios , in addition to the "Current" one that is in the statement, are as follows: Year 0 1 2 3 4 5 A1 Revenue $200,000 $400,000 $750,000 $1,000,000 $2,000,000 A2 Revenue $500,000 $750,000 $1,000,000 $1,750,000 $2,500,000 a Determine the effects of the three scenarios (Current, A1 and A2) on the five years of cash flows. b If the current forecast has a 40% chance of occurring, and the A1 and A2 scenarios each have a 30% chance of occurring, What is the expected value of the year 5 ending cash flow. c Discuss the implications of the results of parts a and b. Year 0 1 2 3 4 5 Angel Investor $1,000,000 40% ownership Production capability Investment $900,000 Revenue $300,000 $500,000 $1,000,000 $2,000,000 $3,000,000 COGS 40% of Revenue SG&A $180,000 $300,000 $450,000 $600,000 $750,000 Depreciation (MACRS) 5 year 20.00% 32.00% 19.20% 11.52% 11.52% Depreciation $180,000 $288,000 $172,800 $103,680 $103,680 Book Value $900,000 $720,000 $432,000 $259,200 $155,520 $51,840 Accounts Receivable 15% of revenue Accounts Payable 20% of inventory Wages Payable 10% of revenue Inventory 25% of revenue Tax rates 20% Income Statement 0 1 2 3 4 5 Revenue $300,000 $500,000 $1,000,000 $2,000,000 $3,000,000 COGS ($120,000) ($200,000) ($400,000) ($800,000) ($1,200,000) Gross Margin $180,000 $300,000 $600,000 $1,200,000 $1,800,000 SG&A ($180,000) ($300,000) ($450,000) ($600,000) ($750,000) Depreciation ($180,000) ($288,000) ($172,800) ($103,680) ($103,680) EBIT ($180,000) ($288,000) ($22,800) $496,320 $946,320 Pre-tax income ($180,000) ($288,000) ($22,800) $496,320 $946,320 Taxes $36,000 $57,600 $4,560 ($99,264) ($189,264) Net Income ($144,000) ($230,400) ($18,240) $397,056 $757,056 Working Capital 0 1 2 3 4 5 Accounts Receivable $0 $45,000 $75,000 $150,000 $300,000 $450,000 Inventory $0 $75,000 $125,000 $250,000 $500,000 $750,000 Accounts Payable ($0) ($15,000) ($25,000) ($50,000) ($100,000) ($150,000) Wages Payable ($0) ($30,000) ($50,000) ($100,000) ($200,000) ($300,000) Total Working capital $0 $75,000 $125,000 $250,000 $500,000 $750,000 Change in Working Capital $0 $75,000 $50,000 $125,000 $250,000 $250,000 Cash Flow Statement 0 1 2 3 4 5 Operations Activities Net Income ($144,000) ($230,400) ($18,240) $397,056 $757,056 Depreciation $180,000 $288,000 $172,800 $103,680 $103,680 Working Capital change ($0) ($75,000) ($50,000) ($125,000) ($250,000) ($250,000) Total ($0) ($39,000) $7,600 $29,560 $250,736 $610,736 Capital Activities Investment ($900,000) Total ($900,000) Financial Activities Angel Investor $1,000,000 Cash Flow $100,000 ($39,000) $7,600 $29,560 $250,736 $610,736 Beginning Balance $0 $100,000 $61,000 $68,600 $98,160 $348,896 Ending Cash Balance $100,000 $61,000 $68,600 $98,160 $348,896 $959,632

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Please provide step-by-step solution The Angel Investor, that is investing a mil

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