Cash Flow Analysis 1 Production Probab 0.2 Probab 0.3 Foxed Costs Overall Probab

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Cash Flow Analysis 1 Production Probab 0.2 Probab 0.3 Foxed Costs Overall Probabi Original Question: Analyzed data indicate that the annual production rate should have 0.2 and 0.3 probabilities respectively to be 40% above or below the stated value, with the stated value having probabity. Fixed costs are estimated to have 0.3 probability to increase by S0% bove and 0.2 probability to decrease 1096 below the stated value, wth a 0.S probability to remain the same in the future. Production rate and fixed costs are equiprobeble independent varisbles. Structure a decision tree and use the rollbeck procedure (section 125 in your textbook) to calculate the risk- adjusted Expected Values (EV) of NPV for each of the two sequences, and graph the values albng with those determined from the DCF analysis. Present your range of outcomes using a bar chart with discrete probabilities 52 50% increase 0.06 4056 Increase Null Change 0.5 0.2 0.5 0.5 0.5 10% Decrease 50% increase Null Chang 0% Decrease 50% increase Null Chan 0.04 0.15 0.25 0.3 0.5 0.2 0.3 0.5 0.2 Given the value of the null change here to be 102,906, 462.22 find the over values Null Change 102,906,462.22 57 0.09 0.15 0.06 59 40% Decrease 0.3 61 Cash Flow Analysis 62 Note: ALL I WANT DONE IS THE TABLE FILLED Production ProbabilityFixed Costs Probability overall Probability NPV PLEASE SHOW THE FORMULAE USED AND STEPS 50% increase Null Chan 0% Decrease 50% increase Null Chan 10% De crea 50% increase Null Chan 10% Decrease 0.06 0.1 0.04 0.15 0.25 0.1 0.09 0.15 0.06 40% Increase 0.2 0.2 0.5 0.5 0.2 0.3 0.5 0.2 0.3 0.5 Given the value of the null change here to be 48,000, 371 94 find the over valuesNull Change $48,000,371.94 0.5 0.3 70 40A% Decrease 0.3 Sensitivity Analysis 41 Graph Sensitivity Analysis-1 Discrete Probability Sensitivity Analysis-2 Cash Flow Analysis 1 & 2 Sensitivity Analysis +2 Graph Decision Tree & Rollback 85 %-

Explanation / Answer

Formulae

DCF=discounted cash flow used for ascertaining net present value.

Expected value=weighted average of the probability and the outcome

Net present value=Net cash outflow -sum of the discounted cash inflow

Discount factor requires usage of time period and discount rate, it is also called present value

if the NPV is positive it is adivisable to accept the project and if it negative then reject the project proposal.

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