Jasmine's Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand...

 

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Jasmine's Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option would be to enter the cashmere sweater market with a new line of high-quality designer label products. The marketing department has determined that the wool and cashmere sweater lines offer the following probability of outcomes and related cash flows: Expand Wool Sweaters Line Present Value of Cash Flows from Enter Cashmere Sweaters Line Present Value of Cash Flows from Expected Sales Probability Fantastic Moderate Low 0.3 Probability 0.2 0.5 0.3 0.6 0.1 Sales $201,000 165,000 91,800 Sales $327,000 232,000 The initial cost to expand the wool sweater line is $161,000. To enter the cashmere sweater line, the initial cost in designs, inventory. and equipment is $155,000 a. Calculate net present value if, Jasmine's Dresswear Manufacturers decides to Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar. Expand wool sweaters line Enter cashmere sweaters line Net Present Value Jasmine's Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option would be to enter the cashmere sweater market with a new line of high-quality designer label products. The marketing department has determined that the wool and cashmere sweater lines offer the following probability of outcomes and related cash flows: Expand Wool Sweaters Line Present Value of Cash Flows from Enter Cashmere Sweaters Line Present Value of Cash Flows from Expected Sales Probability Fantastic Moderate Low 0.3 Probability 0.2 0.5 0.3 0.6 0.1 Sales $201,000 165,000 91,800 Sales $327,000 232,000 The initial cost to expand the wool sweater line is $161,000. To enter the cashmere sweater line, the initial cost in designs, inventory. and equipment is $155,000 a. Calculate net present value if, Jasmine's Dresswear Manufacturers decides to Note: Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar. Expand wool sweaters line Enter cashmere sweaters line Net Present Value

Answer rating: 100% (QA)

To calculate the net present value NPV for each alternative we need to discount the cash flows assoc... View the full answer