Question

WACC = 6% Project Project Period -$150 $100 $75 $80 $75 $100 $25 Based on the information in the table, what is the replacement chain NPV for Project 2? $111.55 $41.59 $83.18 $133.86

Answer 1

WACC 6% Time Cash Flows Present Value Factor Present Value n A B = (1/1.06)^n C = A*B -75.00 100.00 25.00 1.0000 0.9434 0.8900 -75.00 94.34 22.25 Net Present value 41.59

Or [- $75] + [100 * 1/ (1 .06)¹] + [25 * 1/ (1 .06)²]

= -75 + 94.34 + 22.25 = $41.59