Consider this case: Suppose Black Sheep Broadcasting Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 500,000 Year 3 500,000 Year 4 500,000 Black Sheep Broadcasting Company's weighted average cost of capital is 10%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? (Note: Do not round your intermediate calculations.) $1,078,283 $898,569 $1,398,569 $1,448,569
Consider this case: Suppose Black Sheep Broadcasting Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 500,000 Year 3 500,000 Year 4 500,000 Black Sheep Broadcasting Company's weighted average cost of capital is 10%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? (Note: Do not round your intermediate calculations.) $1,078,283 $898,569 $1,398,569 $1,448,569
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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am. 103.
Transcribed Image Text:Consider this case:
Suppose Black Sheep Broadcasting Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to
generate the following net cash flows:
Year
Cash Flow
Year 1 $350,000
Year 2 500,000
Year 3 500,000
Year 4 500,000
Black Sheep Broadcasting Company's weighted average cost of capital is 10%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project
Alpha's net present value (NPV)? (Note: Do not round your intermediate calculations.)
$1,078,283
$898,569
$1,398,569
$1,448,569
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