Solution 1 and 26
Solution and

45 (Solution) 1 and 26.

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I need homework help with 26.1 and 26.6 please complete using excel and use the tool kit and template. Please note the homework changes, show formulas, one spreadsheet with separate worksheets for each problem.Page 1 official template Chapter: 26 Problem: template a. Find the project's expected cash flows and NPV. WACC= Condition Probability CF CF x Prob. Good 30% $0.00 Medium 40% $0.00 Bad 30% $0.00 Expected CF= $0.00 Time line of Expected CF 0 1 2 3 $0.00 $0.00 $0.00 NPV= $0.00 WACC= 0% Salvage Value = $6 Risk-free rate = 6% Decision Tree Analysis Cost Future Cash Flows NPV this Probability 0 Probability 1 2 3 Scenario x NPV $0.00 $0.00 30% 40% $0.00 $0.00 Bradford Services Inc. (BSI) is considering a project that has a cost of $10 million and an expected years. There is a 30 percent probability of good conditions, in which case the project will provide a of $9 million at the end of each year for 3 years. There is a 40 percent probability of medium condit which case the annual cash flows will be $4 million, and there is a 30 percent probability of bad con and a cash flow of -$1 million per year. BSI uses a 12 percent cost of capital to evaluate projects like b. Now suppose the BSI can abandon the project at the end of the first year by selling it for $6 million. BSI will still receive the Year 1 cash flows, but will receive no cash flows in subsequent years. Assume the salvage value is risky and should be discounted at the WACC.


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