Warnock Inc. is considering a project that has the following cash flow and WACC
ID: 2776845 • Letter: W
Question
Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.
WACC:
10.00%
Year
0
1
2
3
Cash flows
-$950
$500
$400
$300
A
$54.62
B
$57.49
C
$60.52
D
$63.54
E
$66.72
Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.
WACC:
10.00%
Year
0
1
2
3
Cash flows
-$950
$500
$400
$300
A
$54.62
B
$57.49
C
$60.52
D
$63.54
E
$66.72
Explanation / Answer
C $60.52 Statemnet showing Cash flows Particulars Time PVf@10% Amount PV Cash Outflows - 1.00 (950.00) (950.00) PV of Cash outflows (950.00) Cash inflows 1.00 0.9091 500.00 454.55 Cash inflows 2.00 0.8264 400.00 330.58 Cash inflows 3.00 0.7513 300.00 225.39 PV of Cash Inflows 1,010.52 NPV 60.52
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