Question

barry company is considering a project that has the following cash flow and wacc data. what is the project's npv? note that a project's projected npv can be negative, in which case it will be rejected. wacc:10.25% year0 1 2 3 4 5 cash flows-$1,100$400$390$380$370$360 a.$301.41b.$399.63c.$274.32d.$338.67e.$413.17

Answer 1

The project under consideration by Anderson Systems has the following cash flow and WACC data. What is the NPV of the project.

Keep in mind that a project should be abandoned if its anticipated NPV is negative. WACC: 9.00% Year 0 1 2 3 Flows of money ($1,000) $500 $500 $500 Assume that the economy is experiencing a slight recession, which has resulted in generally low interest rates and money costs. The WACC for two initiatives that are being thought about but are mutually exclusive is 8%. IRR for Project S is 20%, compared to IRR for Project L being 15%. At the 8% current WACC, the projects have the same NPV. However, you think that if the economy begins to improve, your WACC will also rise due to higher money costs. Additionally, you believe that the projects won't receive funding until the WACC has grown and that the economy won't have an impact on their cash flows. Project S should be suggested since it will have a greater NPV under the improved WACC.

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