Answer:
Step-by-step explanation:
For a standard normal distribution of mean and
the statistic
In this problem we look for the value of X that is 2 standard deviations above the mean.
If there are two standard deviations above the mean, then, in the standard normal distribution, the statistic .
Then, we clear X.
Where:
Answer:
C. $9.04
Step-by-step explanation:
The net present value of a cash flow C in year n at some interest rate r is given by ...
NPV = C·(1 +r)^(-n)
Adding the values of the different cash flows at the different interest rates, we get the results shown in the attached table. The NPV goes up by $9.04 when the cost of capital goes down.
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<em>Additional comment</em>
Neither WACC will cause this project to be rejected. If the WACC were to increase to 11.11%, then the project would have a zero return.
