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Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: Year Cash flows. a. $14.28 b. $7.58 c. $13.50 d. $20,10 e. $8.05 10.00% 0 -$1,000 1 $430 New WACC: 2 $430 9.25% 3 $430

Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: Year Cash flows. a. $14.28 b. $7.58 c. $13.50 d. $20,10 e. $8.05 10.00% 0 -$1,000 1 $430 New WACC: 2 $430 9.25% 3 $430

International Financial Management
International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter16: Country Risk Analysis
Section: Chapter Questions
Problem 20QA
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Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: Year Cash flows. a. $14.28 b. $7.58 c. $13.50 d. $20.10 e. $8.05 10.00% 0 -$1,000 1 $430 New WACC: 2 $430 9.25% 3 $430 Chank My Work (1 remaining)
Transcribed Image Text:Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: Year Cash flows. a. $14.28 b. $7.58 c. $13.50 d. $20.10 e. $8.05 10.00% 0 -$1,000 1 $430 New WACC: 2 $430 9.25% 3 $430 Chank My Work (1 remaining)
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