Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon D in order to copy its content into a spreadsheet. Category To T1 T2 T3 Investment Net working capital change Operating cash flow Salvage – $9,267,383 $575,000 $575,000 $2,922,000 $3,423,000 $4,221,000 $552,000 At what adjusted WACCS will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project. What is the IRR of the project? % (Round to two decimal places.) At what adjusted WACCS will the company accept this project? (Select the best response.) O A. The company will accept this project if the adjusted WACC is greater than the IRR calculated above. O B. The company will accept this project if the adjusted WACC is no more than the IRR calculated above.
Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon D in order to copy its content into a spreadsheet. Category To T1 T2 T3 Investment Net working capital change Operating cash flow Salvage – $9,267,383 $575,000 $575,000 $2,922,000 $3,423,000 $4,221,000 $552,000 At what adjusted WACCS will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project. What is the IRR of the project? % (Round to two decimal places.) At what adjusted WACCS will the company accept this project? (Select the best response.) O A. The company will accept this project if the adjusted WACC is greater than the IRR calculated above. O B. The company will accept this project if the adjusted WACC is no more than the IRR calculated above.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Chapter 11, Question 7
![**Apply WACC in IRR**
Leeward Sailboats is reviewing the following new boat line:
**Table: Financial Data for New Boat Line**
| Category | T₀ | T₁ | T₂ | T₃ |
|-------------------------|--------------|----------|----------|----------|
| Investment | -$9,267,383 | | | |
| Net working capital change | -$575,000 | | | $575,000 |
| Operating cash flow | | $2,922,000 | $3,423,000 | $4,221,000 |
| Salvage | | | | $552,000 |
**Instructions:**
Click on the icon to copy its contents into a spreadsheet.
**Question:**
At what adjusted WACCs will the company accept this project? *Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.*
- What is the IRR of the project?
- **IRR**: [ % ] (Round to two decimal places.)
- At what adjusted WACCs will the company accept this project? *(Select the best response.)*
- **A.** The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
- **B.** The company will accept this project if the adjusted WACC is no more than the IRR calculated above.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8a986b02-ba6c-4ef1-b256-a9c9c22af021%2Ff1af85ba-9c91-49c1-a78f-4d6eeeb19ec3%2Fcggjwqd_processed.png&w=3840&q=75)
Transcribed Image Text:**Apply WACC in IRR**
Leeward Sailboats is reviewing the following new boat line:
**Table: Financial Data for New Boat Line**
| Category | T₀ | T₁ | T₂ | T₃ |
|-------------------------|--------------|----------|----------|----------|
| Investment | -$9,267,383 | | | |
| Net working capital change | -$575,000 | | | $575,000 |
| Operating cash flow | | $2,922,000 | $3,423,000 | $4,221,000 |
| Salvage | | | | $552,000 |
**Instructions:**
Click on the icon to copy its contents into a spreadsheet.
**Question:**
At what adjusted WACCs will the company accept this project? *Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.*
- What is the IRR of the project?
- **IRR**: [ % ] (Round to two decimal places.)
- At what adjusted WACCs will the company accept this project? *(Select the best response.)*
- **A.** The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
- **B.** The company will accept this project if the adjusted WACC is no more than the IRR calculated above.
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