Debby's Dance Studios is considering the purchase of new sound equipment that will enhance the popularity of its aerobics dancing. The equipment will cost $33 , 600 . Debby is not sure how many members the new equipment will attract, but she estimates that her increased annual cash flows for each of the next five years will have the following probability distribution. Debby's cost of capital is 11 percent. Use Appendis. D for an approximate answer but calculate your final answers using the formula and financial calculator methods. a. What is the expected value of the cash flow? The value you compute will apply to each of the five years. b. What is the expected net present volue? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.).

1. Debby's Dance Studios is considering the purchase of new sound equipment that will enhance
the popularity of its aerobics dancing. The equipment will cost $33 , 600 . Debby is not sure how
many members the new equipment will attract, but she estimates that her increased annual cash
flows for each of the next five years will have the following probability distribution. Debby's
cost of capital is 11 percent. Use Appendis. D for an approximate answer but calculate your final
answers using the formula and financial calculator methods. a. What is the expected value of the
cash flow? The value you compute will apply to each of the five years. b. What is the expected
net present volue? (Negative amount should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places.)