7. The Blue Moon is considering a 4-year project that requires an investment of

Question

7. The Blue Moon is considering a 4-year project that requires an investment of $3.2 million for new equipment. This equipment will be depreciated straight-line to zero over the life of the project and will be worthless thereafter. The project is expected to produce cash inflows of $1.12 million a year for 4 years. The firm’s WACC is 13 percent. Management uses the subjective approach for setting required returns for projects and
has set the adjustment for this project at +0.75 percent. What is the NPV of this project?

Explanation / Answer

3.2x4+1.12x13= $84,316.79 Ans

Related Questions

Navigate

• Browse (All)
• Browse 7
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.