ShareThisCapital budgeting problem – any help with this?
I need help with the following problem and 2 questions below it. If anyone can help I would appreciate it.
Note that there are three columns (with cash flows), it just formats weird when I put in in yahoo answers.
Jeremy is the owner of a small construction company. He is thinking about purchasing some construction equipment; however, he knows that the economy will have a major impact on his future cash flows. He is not quire sure what to do with the scenario data that his financial officer gave him, and needs advice.
Scenario Analysis
Worst case – Most Likely – Best case
30% Probability – 50% Probability – 20% Probability
Cost of investment(Year 0) 8,000 8,000 8,000
Year 1 Net Cash Flow ,500 ,500 ,500
Year 2 Net Cash Flow ,800 ,020 0,450
Year 3 Net Cash Flow ,600 2,500 4,800
Year 4 Net Cash Flow ,000 ,800 2,500
Year 5 Net Cash Flow ,500 ,000 ,400
Salvage value (end of year 5) ,000 ,000 ,000
It is explained to Jeremy that the expected return of the project is the sum of the weighted expected returns from each scenario.
Help with these two questions given the info above and explanation would be appreciated.
1) Does the project make sense if the cost of capital is 12%?
2 ) Does the project make sense if Jeremy demands an internal rate of return of 15%?
How many more times is Obama going to talk about road construction & clean energy to boost the economy? (#3)?
This is EXACTLY what he said prior to passage of the "stimulus". (We all know how that worked out…)
He then said it AGAIN (in almost identical comments) at the beginning of this year. (Remember how he was going to "focus like a laser beam" on jobs……)
Here’s a question I asked 9 months ago:
http://answers.yahoo.com/question/index;_ylt=ApDnxuayd1xfPFLwI.qBGfEjzKIX;_ylv=3?qid=20091208143852AAUjyu4
Now he’s saying the SAME THING AGAIN
It seems as if the president’s economic team has no clue what to do (which is why they are still pushing the same worn out rhetoric a year and a half after the stimulus). Are you losing confidence in the president?
http://news.yahoo.com/s/ap/20100830/ap_on_bi_ge/us_obama_economy
Acknowledging that the economy still remains extremely fragile, the president said he’d also have other specific ideas in the days ahead.
He mentioned extending Bush tax cuts due to expire this year for households making under 0,000 a year, upping the nation’s investment in clean energy, rebuilding more roads and highways and tax cuts designed to keep jobs in the United States.
"My economic team is hard at work identifying additional measures that could make a difference in both promoting growth and hiring in the short term and increasing our economy’s competitiveness in the long term," he said.
What do you think of these guys opposing Mosque construction?
http://www.yahoo.com/_ylt=ArPxJXAngilafsuj16M0LKibvZx4;_ylu=X3oDMTJwNWE3c2czBGNwb3MDNARlZAMxBGcDMGJjZThmODhiNjBiZGY0ZTk2OTgyNGRmYjA2NDZkMGMEaW50bAN1cwRzZWMDaW5fbmV3cwRzbGsDbndzLXRpdGxlBHRlc3QDNzAx/SIG=147kp13mv/EXP=1279839652/**http%3A//news.yahoo.com/s/yblog_upshot/20100721/pl_yblog_upshot/anti-mosque-protests-on-the-rise-say-muslim-advocates
What do you think of them waving flags while blatantly attacking the American Constitution?
anwerers bring up a good point, these people are exercicing ther 1st amendment right to try and deny someone else ther 1st amendment right
yahoo news headline," immigrants hit hard by U.S. economy and sub-prime crisis"?
Well my question just a few days ago has been noted. I asked, " Do you want to know why I’m looking forward to a recession?" And yahoo just mentioned my reasons. What does an out of work illegal construction worker do when he can’t live with 15 other illegals? There’s no unemployment when you get paid under the table. They have no skills to fall back on…I’m hoping it gets even worse.What do you think?
shjolds-your post should be the yahoo headline.
I LOVE the last line of the yahoo article where the hispanic advocate claimed( in regards to the sub-prime) " they were subject to more abuse because the paperwork was in English". Does anyone else want to smack this woman silly?
To the person who asked how illegals get housing if they are paid under the table, hereis your answer- They don’t. In the illegal world there are people9 i forget they call them) who are able to sign the paperwork. i won’t admit to knowing how they qualified but they do.then they rent the house out to 10-15 illegals.
Does it seem that libs have framed cons again?
http://news.yahoo.com/s/ap/20100830/ap_on_re_us/us_tennessee_mosque#mwpphu-post-form
So some equipment got vandalized on a job site. Happens everyday, 20 times a day, everyday. I know, I work road construction for a private contractor.
Tennessee Muslims? C’mon Yahoo news, will you libtards stop at nothing?
Are humans good ark designers?Should God contract out all 2012 ark construction to humans or just make His own?
THIS LOOKS PRETTY GOOD:
http://news.yahoo.com/nphotos/Ark-Eco-Building-Future/ss/events/sc/011011theark#photoViewer=/ydownload/20110110/photos_net_web_sc/1294694210
.#3 Why are criminals so stupid?
I mean, how could he unload such a thing?
Thief Takes ,0000 Electronic Message Sign
WATERBURY, Conn. – State police said somebody has made off with an electronic message sign used by the Department of Transportation to provide information to motorists on Interstate 84 in Waterbury.
State police said the variable message sign along I-84 near exit 25 was reported stolen earlier this week.
The sign measures 4-by-6 feet and is mounted on a two-wheel trailer. State police say it’s worth about ,000.
The sign was parked on the eastbound side of the highway and it’s used to notify motorists of accidents, construction news and traffic delays.
http://news.yahoo.com/s/ap/20080917/ap_on_fe_st/odd_stolen_sign;_ylt=AtWxcCofOIE286a4LQObVV7tiBIF
Will Obama, Pelosi, and Reid admit that their shovel ready construction stimulus didn't create any new jobs?
http://news.yahoo.com/s/ap/20100111/ap_on_bi_ge/us_stimulus_unemployment
Can the Iraq war and subsequent re-construction be considered a failure or is there hope?
http://news.yahoo.com/s/ap/20070419/ap_on_go_co/us_iraq
A bill that aims to stop teacher & police layoffs was passed. What makes those jobs more important than others?
Why wasn’t a bill passed by the Senate that would stop layoffs of other jobs? It provides funding to local governments specifically for the purpose of preventing police and teacher layoffs. Does being a factory worker or a garbageman or a construction worker make you less important than being a teacher or a police officer? Think about this once.
http://news.yahoo.com/s/ap/20100805/ap_on_bi_ge/us_jobs_bill
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