Assignment #4 Review Sheet1. & 2. There is an example posted on UBlearns under “Course Documents” that is very similar to these questions. It is called “Table 8-1 (with questions from page 230).xls” and it should be very helpful.- Working Capital Is equal to 10% of the next year’s forecasted sales- Pretax Profit is equal to Revenues – Expenses – Depreciation- Cash Flow from Operations is equal to Profit After Tax + Depreciation- Total Project Cash Flow is equal to CF, invest. in fixed assets + CF, invest. in wk capital + Cash flow from operationsFor 2a & 2b, you will set each one up just like Question #1 and the example (do them separately). For 2a, make sure that you only change the sales forecasts and no other information from #1. For 2b, make sure that you only change the percentage of working capital and no other information from #1 (use the original sales forecasts, not the ones you changed for Part A.)3.(a) Accounting Break-Even = (Fixed Costs + Depreciation) / Variable Margin- The variable margin is the difference between the selling price and the cost3.(b) See slide 9.6 and the Spreadsheet called "Table 9-1 and 9-3". (Sales will be based off quantity sold and the breakeven point is where NPV = 0). 4.(a) Percentage Return = (Current Share Price – Initial Share Price + Dividend) / Initial Share Price4.(b) Dividend Yield = Dividend / Initial Share PricePercentage Capital Gain = (Current Share Price – Initial Share Price) / Initial Share Price4.(c) You can find the real rate of return by solving for it in the following equation: 1 + real return = (1 + nominal return) / (1 + inflation rate)- The inflation rate is given and the nominal return is your answer from Part A5.(a) First, you should find the actual return for each projected price (12, 20, 30, 40 & 50). This is equal to (Projected Price – Initial Price) / Initial Price. Then the expected return is found by adding up each of the actual returns multiplied by the appropriate probability using the E(r) formula.5.(b) First, you should take the actual return for each price (that you found in Part A) and subtract the expected return (your answer to Part A) then take it to the second power or (r– E(r )))^2. Then multiply times the probability and add up all the terms to get the expected variance. The standard deviation is the square root of the
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