# Finance Review Questions

Attached you will find two finance questions that I need step by step guidance for with formulas included. Please show all of the work so that I may understand the material fully.

1. You have invested in a project that has the following payoff schedule:

Payoff Probability of Occurrence

$40 .15

$50 .20

$60 .30

$70 .30

$80 .05

What is the expected value of the investment's payoff? Show all formulas along with calculations (Round to the nearest $1).

A) $70

B) $60

C) $59

D) $65

2. Analysts expect a project to generate EBIT of $500,000 per year for 5 years. Depreciation expense is expected to be $150,000 per year and the corporation's tax rate is 40%. The project will require an increase in net working capital of $50,000 in year one and a decrease in net working capital of $25,000 in year five. What is the free cash flow from the project in year one? Show all formulas along with calculations.

A) $250,000

B) $450,000

C) $400,000

D) $100,000

https://brainmass.com/business/finance/finance-review-questions-250496

#### Solution Preview

1. You have invested in a project that has the following payoff schedule:

Payoff Probability of Occurrence

$40 .15

$50 .20

$60 .30

$70 .30

$80 .05

What is the expected value of the investment's payoff? Show all formulas along with calculations (Round to the nearest $1).

A) $70

B) $60

C) $59 ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer what is the expected value of the investment's payoff.