Answer:
The projected net present value of this project is $101,488
Explanation:
In order to calculate the projected net present value of this project, first we would need to calculate the WACC as follows:
WACC=Respective cost*Respective weight
Aftertax cost of debt=8.3(1-tax rate)
=8.3(1-0.21)=6.557%
Hence, WACC=(6.557*0.45)+(0.05*9.2)+(0.5*15.4)
=11.11065%
Therefore, to calculate the projected net present value of this project we would have to use the following formula:
NPV=Present value of inflows-Present value of outflows
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=91000/1.1111065+248000/1.1111065^2+145000/1.1111065^3
=$388,488.32
Therefore, NPV= $388,488.32-$287000
=$101,488
The projected net present value of this project is $101,488