Last month, Amang Juan analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the BSP took actions that changed interest rates and therefore the firm's WACC. BSP’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Old WACC: 10.00% New WACC: 11.25% Year 0 1 2 3 Cash flows −$1,000 $410 $410 $410
Last month, Amang Juan analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the BSP took actions that changed interest rates and therefore the firm's WACC. BSP’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Old WACC: 10.00% New WACC: 11.25% Year 0 1 2 3 Cash flows −$1,000 $410 $410 $410
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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Last month, Amang Juan analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the BSP took actions that changed interest rates and therefore the firm's WACC. BSP’s action did not affect the
|
Old WACC: |
10.00% |
New WACC: |
11.25% |
|
|
Year |
0 |
1 |
2 |
3 |
|
Cash flows |
−$1,000 |
$410 |
$410 |
$410 |
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