Part 2 Assume the new project's operating cash flows for the upcoming 5 years are as follows: Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 Project A $-8,000,000.00 1,020,000.00 1,850,000.00 1,960,000.00 2,370,000.00 2,550,000.0O WACC 2-a. What are the WACC (restated from Part 1). NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g. .3555 should be entered as 35.55).) WACC (from Part 1) 7.93% $ 419,066.00 NPV IRR 6.15% Payback Method 4.31 2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method? O Project A should be accepted O Project A should be rejected
Part 2 Assume the new project's operating cash flows for the upcoming 5 years are as follows: Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 Project A $-8,000,000.00 1,020,000.00 1,850,000.00 1,960,000.00 2,370,000.00 2,550,000.0O WACC 2-a. What are the WACC (restated from Part 1). NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g. .3555 should be entered as 35.55).) WACC (from Part 1) 7.93% $ 419,066.00 NPV IRR 6.15% Payback Method 4.31 2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method? O Project A should be accepted O Project A should be rejected
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
Related questions
Question
Are the values entered in 2A correct? Should project A be accepted or rejected?
Transcribed Image Text:Part 2
Assume the new project's operating cash flows for the upcoming 5 years are as follows:
Initial Outlay
Inflow year 1
Inflow year 2
Inflow year 3
Inflow year 4
Inflow year 5
WACC
Project A
$-8,000,000.00
1,020,000.00
1,850,000.00
1,960,000.00
2,370,000.00
2,550,000.00
2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with
a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole
percentages (e.g. .3555 should be entered as 35.55).)
WACC (from Part 1)
7.93%
NPV
$ 419,066.00
IRR
6.15%
Payback Method
4.31
2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method?
O Project A should be accepted
O Project A should be rejected
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