Problem 13-3

a Given
Probability Revenue
Enter the gi
from the te

Solution
Expected Cash Flow $ -
oblem 13-3

Enter the given values

from the text book here

Solution
 Problem 13-4

Scenario I
Probability

High Priced Boats Category

Unit Sales
Avg Price per Unit
Total Revenues $0.00

Medium Priced Boats Category

Unit Sales
Avg Price per Unit
Total Revenues $0.00

Low Priced Boats Category

Unit Sales
Avg Price per Unit
Total Revenues $0.00

Total Revenues from each scenario $0.00

Solution
Expected Revenue $ -
m 13-4

Scenario II Scenario III

Enter the given values
from the text book here

Enter the given values

from the text book here

$0.00 $0.00

Enter the given values

from the text book here

$0.00 $0.00

Enter the given values

from the text book here
$0.00 $0.00

$0.00 $0.00
 Problem 13-5

a Given
Probability NPV estimate
Enter the gi
from the te

Solution
Expected NPV $ -

b Given
Probability State of Demand
High 1 -Pb - .5
Medium 50%
Low Pb

Solution

Let probability be "Pb", so the sum of the probabilities of all possible states is equal to one a
1.00 = Pb(low
Setting demand
the expected state)
NPV + .50
equal + Pb(high
to zero usingdemand
the abovestate) such thatand
probabilities Pb(High demand
solving for thestate)
pb(lo
probability:

Pb (low demand state) #DIV/0!

oblem 13-5

Enter the given values

from the text book here

Solution

Given
NPV Estimate
Enter the given values
from the text book here

Solution

le states is equal to one and the probability of the medium state is .5 , i.e.,
at Pb(High
s and demand
solving for thestate)=
pb(low.5demand
- Pb (lowstate)
demand state)
results in the following
 Pro

Given
Initial cost of equipment
Project and equipment life
Salvage value of equipment
Working capital requirement
Depreciation method
Depreciation expense
Discount rate
Tax rate
Enter the given values
from the text book here

Base case
Unit sales
Price per unit
Variable cost per unit
Fixed costs

Best Case
Solution

Revenues $0.00
Variable cost $0.00
Fixed Expenses $0.00
Gross margin $0.00
Depreciation #DIV/0!
Net operating income #DIV/0!
Income tax expense #DIV/0!
Net income #DIV/0!
Cash flow #DIV/0!

NPV

Worst Case Assuming the negative tax credit obtained here can used so
Solution

Revenues $0.00
Variable cost $0.00
Fixed Expenses $0.00
Gross margin $0.00
Depreciation #DIV/0!
Net operating income #DIV/0!
Income tax expense #DIV/0!
Net income #DIV/0!
Cash flow #DIV/0!

NPV=PV(E12,E7,D50)-E6
NPV
 Problem 13-6

Given
Enter the given values
from the text book here

Straight-Line
#DIV/0!
Enter the given values
from the text book here

Enter the given values

from the text book here

Worst case Best Case

0 0
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00

Solution
Excel formula in previous column
F17*F18
F17*F19
F20
D25-D26-D27
E11
D28-D29
D30* E13
D30-D31
D32+D29

#DIV/0!

e tax credit obtained here can used somewhere else or carried forward
Solution
Excel formula in previous column
E17*E18
E17*E19
E20
D42-D43-D44
E11
D45-D46
D47*E13
D47-D48
D32+D29

#DIV/0!
 Problem

Given
Initial cost of equipment
Project and equipment life
Salvage value of equipment
Working capital requirement
Depreciation method
Depreciation expense
Discount rate
Expected units of sale
Sale price per unit
Variable cost per unit
Fixed costs
Tax rate

a
Base case
Revenues $0.00
Variable cost $0.00
Fixed Expenses $0.00
Gross margin $0.00
Depreciation #DIV/0!
Net operating income #DIV/0!
Income tax expense #DIV/0!
Net income #DIV/0!
Cash flow #DIV/0!

NPV

NPV

% decrease in NPV=(D39-D36)/D36 #DIV/0!

NPV

% decrease in NPV #DIV/0!

 NPV

% decrease in NPV=(D50-D36)/D36 #DIV/0!

e NPV=PV($E$12,$E$7,-I32,-$E$9)-$E$6-$E$9
NPV

% decrease in NPV #DIV/0!

f Base case
Unit sales
Price per unit
Variable cost per unit
Fixed costs
Base Case

Solution

Revenues
Variable cost $0.00
Fixed Expenses $0.00
Gross margin #VALUE!
Depreciation #DIV/0!
Net operating income #VALUE!
Income tax expense #VALUE!
Net income #VALUE!
Cash flow #VALUE!

NPV #VALUE!

Best Case
Solution

Revenues $0.00
Variable cost $0.00
Fixed Expenses $0.00
Gross margin $0.00
Depreciation #DIV/0!
Net operating income #DIV/0!
Income tax expense #DIV/0!
Net income #DIV/0!
Cash flow #DIV/0!

NPV #DIV/0!
Worst Case
Solution

Revenues $0.00
Variable cost $0.00
Fixed Expenses $0.00
Gross margin $0.00
Depreciation #DIV/0!
Net operating income #DIV/0!
Income tax expense #DIV/0!
Net income #DIV/0!
Cash flow #DIV/0!

NPV #DIV/0!
 Problem 13-7

Given
Enter the given values
from the text book here

Straight-Line
#DIV/0!
Enter the given values
from the text book here

Solution
Excel formula in previous column 10% decrease in units sold 10% decrease in cost per unit
E13*E14 $0.00 $0.00
E13*E15 $0.00 $0.00
E16 $0.00 $0.00
D25-D26-D27 $0.00 $0.00
E11 #DIV/0! #DIV/0!
D28-D29 #DIV/0! #DIV/0!
D29* E17 #DIV/0! #DIV/0!
D30-D31 #DIV/0! #DIV/0!
D32+D29 #DIV/0! #DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
 #DIV/0!

#DIV/0!
Enter the given values
from the text book he

Worst case Best Case

10% increase in variable cost per unit 10% increase in fixed cost
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
 Problem 13-11

Given
Enter the given values
Price per an hour from the text book here
Variable cost per hour
Depreciation expenses
Fixed costs

Solution
a Accounting break-even
b Cash break-even units of production
 Problem 13-11

Enter the given values

from the text book here

#DIV/0!
#DIV/0!