Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 $450,000 Year 3 $400,000 Year 4 $475,000 Hungry Whale Electronics's weighted average cost of capital is 7%, 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)? $959,045 $1,309,045 $1,409,045 $1,150,854
Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 $450,000 Year 3 $400,000 Year 4 $475,000 Hungry Whale Electronics's weighted average cost of capital is 7%, 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)? $959,045 $1,309,045 $1,409,045 $1,150,854
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial
investment of $450,000. The project is expected to generate the following net cash flows:
Year
Cash Flow
Year 1
$350,000
Year 2
$450,000
Year 3
$400,000
Year 4 $475,000
Hungry Whale Electronics's weighted average cost of capital is 7%, 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)?
$959,045
$1,309,045
$1,409,045
$1,150,854](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6795bcee-481e-4cd9-9402-1dd9d1389a86%2Fdbbcf81f-f2de-4754-aba8-48060702306a%2Fz1dc3d_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial
investment of $450,000. The project is expected to generate the following net cash flows:
Year
Cash Flow
Year 1
$350,000
Year 2
$450,000
Year 3
$400,000
Year 4 $475,000
Hungry Whale Electronics's weighted average cost of capital is 7%, 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)?
$959,045
$1,309,045
$1,409,045
$1,150,854
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