Calculate the project volatility Copyright by Domingo Castelo Joaquin 2005

Calculate the project volatility copyright by domingo

This preview shows page 5 - 8 out of 8 pages.

Calculate the project volatility. Copyright by Domingo Castelo Joaquin 2005, [email protected]
Image of page 5
Historical Cost of Fixed Assets 600 600 Accumulated Depreciation 100 Ending Book Value 600 500 Salvage Value Ending Book Value Capital Gains Capital Gains Tax Salvage Value Captial Gains Tax Net Proceeds from Sale of Fixed Assets Year 0 Year 1 Notation: PV = Present value of remaining cash flows as of the end of year 0. NPV = Net present value. PV1 = Present value of remaining cash flows as of the end of year 1. CF1 = Free cash flow in year 1. LN(PV1+CF1) = Natural logarithm of (PV1+CF1).
Image of page 6
Year 2 Year 3 #ADDIN? #ADDIN? 50% 50% #ADDIN? #ADDIN? #ADDIN? #ADDIN? 65 70 100 100 #ADDIN? #ADDIN? #ADDIN? #ADDIN? #ADDIN? #ADDIN? 100 100 #ADDIN? #ADDIN? (180) #ADDIN? #ADDIN? #ADDIN? - #ADDIN? #ADDIN? uniformly distributed between rate that is normally distributed al variable costs are expected d in each year is expected to be incremental revenues in the nd growing by $5 each year n plant and equipment. Plant zero value. At the end of the ed return is 10%.
Image of page 7
600 600 200 300 400 300 100 300 (200) (80) 100 -80 180 Year 2 Year 3
Image of page 8

You've reached the end of your free preview.

Want to read all 8 pages?

  • Spring '17
  • Depreciation, Generally Accepted Accounting Principles, ADDIN

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes