Can you explain this graph Distribution of Profits With and Without HedgingProbability ofachievingcash flowsDistribution of hedged cash flowsDistribution ofunhedged cash flowsCash flows$40million million million$100million$20$50$70million

If the cash flow are hedged than there are more chances of achieving the cash flow and if not hedged…

Answered: Probability of achieving cash flows…

Business

Finance

Probability of achieving cash flows Distribution of hedged cash flows

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 4MC

See similar textbooks

Similar questions

How do proceeds from the sale of PPE impact Declan's Designs' 2022 Statement of Cash Flows? Question 24 options: The proceeds from the sale of PPE are added in Cash Flows from Financing The proceeds from the sale of PPE are added in Cash Flows from Operations The proceeds from the sale of PPE are subtracted in Cash Flows from Financing The proceeds from the sale of PPE are not included on the Statement of Cash Flows The proceeds from the sale of PPE are subtracted in Cash Flows from Investing The proceeds from the sale of PPE are added in Cash Flows from Investing The proceeds from the sale of PPE are subtracted in Cash Flows from Operations
Xander Inc. has prepared the following sensitivity analysis: Line Item Description Amount Amount Amount Estimated Annual Net Cash Flow $500,000 $600,000 $700,000 Present value of annual net cash flows (× 4.487) $2,243,500 $2,692,200 $3,140,900 Present value of residual value 50,000 50,000 50,000 Total present value $2,293,500 $2,742,200 $3,190,900 Amount to be invested (3,000,000) (3,000,000) (3,000,000) Net present value $(706,500) $(257,800) $190,900 In addition, it has assigned the following likelihoods to the three possible annual net cash flows: $500,000, 70%; $600,000, 20%; and $700,000, 10%. Based on an expected value analysis, which of the following statements is accurate? a. The expected value of the annual net cash flow is $540,000, and the project should be accepted. b. The expected value of the annual net cash flow is $660,000, and the project should be accepted. c. The expected value of the annual net cash flow is $660,000, and the project…
16 Statement of financial position information is useful for all of the following except to Group of answer choices compute rates of return evaluate capital structure assess future cash flows analyze cash inflows and outflows for the period
___________is a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends. a. Percent of sales methodb. Ratio Analysisc. Trend Analysisd. Free Cash Flowe. None of the above
Calculate the present value and future value of an uneven cash flow showing how to value common stocks and corporate projects.
Consider the mixed streams of cash flows shown in the following table. YEAR A B1 $50,000 $10,0002 $40,000 $20,0003 $30,000 $30,0004 $20,000 $40,0005 $10,000 $50,000 Totals $150,000 $150,000 (a) Find the present value of each stream using a 15% discount rate(b) Compare the calculated present values and discuss them in light of the fact that the undiscounted cash flows total $150,000 in each case.
Preparing the statement of cash flows—direct method Use the Sweet Valley data from Problem P14-41B.< Requirements Prepare the 2018 statement of cash flows by the direct method. How will what you learned in this problem help you evaluate an investment?
How do Dividends Paid impact Declan's Designs' Statement of Cash Flows? Question 30 options: Dividends Paid are added in Cash Flows from Investing Dividends Paid are subtracted in Cash Flows from Operations Dividends Paid are added in Cash Flows from Financing Dividends Paid are not included on the Statement of Cash Flows Dividends Paid are subtracted in Cash Flows from Investing Dividends Paid are subtracted in Cash Flows from Financing Dividends Paid are added in Cash Flows from Operations
Preparing the statement of cash flows—direct method Use the Rolling Hills, Inc. data from Problem P14-34A. Requirements Prepare the 2018 statement of cash flows by the direct method. How will what you learned in this problem help you evaluate an investment?
Part AReview the existing literature to critically examine the relative information content of theincome statement and the statement of cash flows. Why do investors find both incomestatement and statement of cash flows useful? Part BDownload the annual financial reports of BHP Ltd, Santos Ltd, and Funtastic Ltd for the year2019, 2018 and 2017. Examine the consolidated Cash Flow Statements for each companiesacross three years. Answer the following questions about each of the three cash-flowstatements.1. For each companies [except mentioned otherwise as in c), g) and i) below], across threeyears on the Statement of Cash Flows discuss:a) What are the major sources of cash for each firm? What are the major uses ofcash for each firm?b) What was the trend in cash flow from (continuing) operations for each firm?c) Compare and contrast the cash flow from operations with the net profit after taxin income statement. Explain in detail the major reasons for the differencebetween these two figures.…
Computing cash flows for investing and financing activities Consider the following facts for Java Jolt: a. Beginning and ending Retained Earnings arc $45,000 and $70,000, respectively, Net income for the period is $60,000. b. Beginning and ending Plant Assets arc $124,500 and $134,500, respectively. c. Beginning and ending Accumulated Depreciation—Plant Assets are $21,500 and $26,500, respectively. d. Depreciation Expense for the period is $17,000, and acquisitions of new plant assets total $29,000. Plant assets were sold at a $5,000 gain. Requirements How much are cash dividends? What was the amount of the cash receipt from the sale of plant assets?
How do Dividends Paid impact Declan's Designs' Statement of Cash Flows? Question 30 options: Dividends Paid are added in Cash Flows from Investing Dividends Paid are subtracted in Cash Flows from Financing Dividends Paid are added in Cash Flows from Financing Dividends Paid are subtracted in Cash Flows from Investing Dividends Paid are added in Cash Flows from Operations Dividends Paid are not included on the Statement of Cash Flows Dividends Paid are subtracted in Cash Flows from Operations