Year Cash Flow (in millions) project with the following projected free cash flows: 0 2 -$49.6 $19.2 OB. Cash Flows (millions) $49.6 Year 0 OC. Cash Flows (millions) $49.6 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.1%, Show on this project? Why or why not? Year 0 D. Cash Flows (millions) - $49.6 $9.7 1 -$9.7 1 $9,7 $9.7 $19.2 2 -$19.2 2 $19,2 C $19.5 3 -$19.5 3 3 $19,5 $19.5 $14.5 -$14.5 4 $14.5 $14.5
Year Cash Flow (in millions) project with the following projected free cash flows: 0 2 -$49.6 $19.2 OB. Cash Flows (millions) $49.6 Year 0 OC. Cash Flows (millions) $49.6 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.1%, Show on this project? Why or why not? Year 0 D. Cash Flows (millions) - $49.6 $9.7 1 -$9.7 1 $9,7 $9.7 $19.2 2 -$19.2 2 $19,2 C $19.5 3 -$19.5 3 3 $19,5 $19.5 $14.5 -$14.5 4 $14.5 $14.5
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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Dj 1

Transcribed Image Text:RiverRocks, Inc., is considering a project with the following projected free cash flows:
Year
0
2
Cash Flow
- $49.6
$19.2
(in millions)
OB. Cash Flows (millions) $49.6
Year
OC. Cash Flows (millions)
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.1%, Should it take
on this project? Why or why not?
0
Year
$49.6
Year
0
D. Cash Flows (millions) - $49.6
0
The net present value of the project is S
$9.7
-$9.7
1
$9.7
1
$9.7
$19.2
2
-$19.2
2
$19.2
2
$19.5
-$19.5
3
$19.5
LLL
3
3
$19,5
million (Round to three decimal places.)
$14.5
4
-$14.5.
$14.5
4
$14.5
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