Question

Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected.
WACC: 10.00%
Year 0 1 2 3
Cash flows -$1,050 $450 $460 $470

Answer 1

NPV = NPV(Rate,CF1,CF2,CF3) + CF0
ie NPV = NPV(10%,450,460,470) - 1050 = $92.37

As NPV is positive at $92.37, Project should be accepted

Answer 2

-1050 +450/(1.10)+ 460/(1.10)^2 +470/(1.10)^3
92.37

Answer 3

SOLUTION ;

r = WACC = 10% = 0.1 

=> 1 + r = 1.1

NPV 

= - 1050 + 450/1.1 + 460/1.1^2 + 470/1.1^3 

= 92.37 ($) 

So, Project’s NPV is = $92.37  (ANSWER)

As NPV is positive, project should be accepted.