Question Description

Assignment requirements: Please answer all questions. You may use Excel and/or Word to complete the assignment. SHOW ALL WORK! Points will be deducted for not providing detailed calculations. When fulfilling a requirement that asks for a recommendation, please write in complete sentences.

Assignment Tips: Requirement #1 requires several systematic steps to arrive at the answer:

1. Determine the expected value of the first year’s sales. You will need to consider the assumption, sales, and the probabilities.
2. Project sales for the next 5 years. Year 2 is calculated using the answer from (1).
3. Then determine operating expenses and EBDT for 6 years. Note: operating expenses are 70% of sales from (2).
4. Determine the annual depreciation for six years using the five-year MACRS table on page 398 of your text.
5. Combine the data from (3) and (4) into a table like Table 12-14 on page 400