Apply WACC in NPV. Brawn Blenders has the following incremental cash flow for its new project: Click on the Icon in order to copy its content into a spreadsheet. Category To T2 T3 Investment Net working capital change Operating cash flow Salvage - $4,777,000 - $349,000 $349,000 $2,024,000 $2,024,000 $2,024,000 $347,000 Should Brawn accept or reject this project at an adjusted WACC of 9.38%, 11.38%, or 13.38%?

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
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Chapter 11, Question 7

Apply WACC in NPV. Brawn Blenders has the following incremental cash flow for its new project:
Click on the Icon o in order to copy its content into a spreadsheet.
Category
Investment
Net working capital change
Operating cash flow
To
T1
T2
T3
- $4,777,000
- $349,000
$349,000
$2,024,000
$2,024,000
$2,024,000
Salvage
$347,000
Should Brawn accept or reject this project at an adjusted WACC of 9.38%, 11.38%, or 13.38%?
Should Brawn accept or reject this project at an adjusted WACC of 9.38%? (Select the best response.)
O A. The project should be accepted because the NPV is positive. The benefits exceed the costs in today's dollars.
O B. The project should be rejected because the NPV is negative. The costs exceed the benefits in today's dollars.
Transcribed Image Text:Apply WACC in NPV. Brawn Blenders has the following incremental cash flow for its new project: Click on the Icon o in order to copy its content into a spreadsheet. Category Investment Net working capital change Operating cash flow To T1 T2 T3 - $4,777,000 - $349,000 $349,000 $2,024,000 $2,024,000 $2,024,000 Salvage $347,000 Should Brawn accept or reject this project at an adjusted WACC of 9.38%, 11.38%, or 13.38%? Should Brawn accept or reject this project at an adjusted WACC of 9.38%? (Select the best response.) O A. The project should be accepted because the NPV is positive. The benefits exceed the costs in today's dollars. O B. The project should be rejected because the NPV is negative. The costs exceed the benefits in today's dollars.
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