Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon in order to copy its content into a spreadsheet. Category To T₁ Investment - $8,994,560 Net working capital change - $486,000 Operating cash flow $2,872,000 Salvage T2 T3 $486,000 $3,515,000 $4,111,000 $653,000 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.) A. The company will accept this project if the adjusted WACC is no more than the IRR calculated above. OB. The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon in order to copy its content into a spreadsheet. Category To T₁ Investment - $8,994,560 Net working capital change - $486,000 Operating cash flow $2,872,000 Salvage T2 T3 $486,000 $3,515,000 $4,111,000 $653,000 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.) A. The company will accept this project if the adjusted WACC is no more than the IRR calculated above. OB. The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 35SP
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Transcribed Image Text:Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line:
Click on the Icon in order to copy its content into a spreadsheet.
Category
To
T₁
Investment
- $8,994,560
Net working capital change
- $486,000
Operating cash flow
$2,872,000
Salvage
T2
T3
$486,000
$3,515,000
$4,111,000
$653,000
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.)
A. The company will accept this project if the adjusted WACC is no more than the IRR calculated above.
OB. The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
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