Week 6 Assignment - 75% chance Profits $1,000,000 or...

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Week 6 Kristyn Mugrauer Assignment 6 AC574 Chapter 16: 16-13: A. The best income statement statistic to use for this scenario is to focus on the loss of sales due to the website shutdown for one day. B. $14,000,000 * 15% * (1/365) = $5,753.42 $14,000,000 * 20% * (1/365) = $7,671.23 Therefore, the unavailability loss is between $5,753 and $7,671 in sales for 2004. 16-15: Initial Investment $250,000 Legality settled after 1 year
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Unformatted text preview: 75% chance Profits $1,000,000 or $4,000,000 Profit Chances 50% - 50% Option Loss: i = 6% $4,000,00 0 50% ($250,000) ($500,000) 1 year Today 50% $1,000,00 0 {.5[($4 M - $500,000)/1.06]} + {.5[($1 M - $500,000)/1.06]} {.5[($3.5 M)/1.06]} + {.5[($500,000)/1.06]} {.5[$3,301,887]} + {.5[$471,698]} $1,650,943 + $235,849 $1,886,792 $250,000 + $1,886,792 $2,136,792...
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This note was uploaded on 02/07/2009 for the course AC 574 taught by Professor Kabani during the Winter '09 term at Keller Graduate School of Management.

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