4BP The Alliance Corp. expects to se... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 4BP (page 114)

The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated. What is the expected value of the total sales projection?
Outcome
Probability
Units
Price
A
0.70
225
$20
B
0.10
370
35
C
0.20
510
45

Short Answer

Expert verified

The total sales value projection of the company is $9,035.

Step by step solution

Expected sales value of A

$\begin{array}{rcl} Expected sales & = & Units sold 脳 Unit price 脳 Probability \\ = & 225 脳 $ 20 脳 0.70 \\ = & $ 3, 150 \end{array}$

Expected sales value of B

$\begin{array}{rcl} Expected sales & = & Units sold 脳 Unit price 脳 Probability \\ = & 370 脳 $ 35 脳 0.10 \\ = & $ 1, 295 \end{array}$

Expected sales value of C

$\begin{array}{rcl} Expected sales & = & Units sold 脳 Unit price 脳 Probability \\ = & 510 脳 $ 45 脳 0.20 \\ = & $ 4, 590 \end{array}$

Expected total sales value projection of the Alliance Corp.

$\begin{array}{rcl} Expected total sales value & = & Expected sales of A + Expected sales of B + Expected sales of C \\ = & $ 3, 150 + $ 1, 295 + $ 4, 590 \\ = & $ 9, 035 \end{array}$

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Indicate whether item is on Balance sheet (BS) or Income statement (IS)	If on Balance sheet, designate which category	Item
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Short Answer

Step by step solution

Expected sales value of A

Expected sales value of B

Expected sales value of C

Expected total sales value projection of the Alliance Corp.

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