Braun Industries has a WACC of 10% and is considering an investment project that has the following cash flows: Year Cash Flow 0          $600 1          $400 2          $300 What’s the project’s NPV given that WACC is 10%? What’s the project’s NPV if WACC is 20%? Based on the calculated NPVs in questions 12 and 13, what’s the estimated project’s IRR using interpolation method? Should the project be accepted based on IRR? Why? Should the project be accepted based on NPV? Why?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Braun Industries has a WACC of 10% and is considering an investment project that has the following cash flows:

Year Cash Flow

0          $600

1          $400

2          $300

What’s the project’s NPV given that WACC is 10%?
What’s the project’s NPV if WACC is 20%?
Based on the calculated NPVs in questions 12 and 13, what’s the estimated project’s IRR using interpolation method?
Should the project be accepted based on IRR? Why?
Should the project be accepted based on NPV? Why?

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