2 RiverRocks, Inc., is considering a project with the following projected free cash flows: 2 Year...

Question

Question

Answer 1

Answer #1

The timeline is

A.i.e. Outflows in Year 0 and inflows in rest

NPV = Present value of cash inflows – Present value of cash outflows

= -50.7 million + 10.4 million/(1.117) + 19.6 million/(1.117)^2 + 19.9 million/(1.117)^3 + 14.9 million/(1.117)^4

= -$1.830 million

Should not

Negative

Answer 2

Similar Homework Help Questions

RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4...

RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in millions) −$50.7 $9.4 $20.5 $20.5 $15.5 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.7%. Should it take on this project? Why or why not?
RiverRocks, Inc., is considering a project with the following projected free cash flows: year 0 1...

RiverRocks, Inc., is considering a project with the following projected free cash flows: year 0 1 2 3 4 Cash flow millions $-49.9 $9.9 $19.7 $19.1 $14.3 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.7 %. Should it take on this project? Why or why not?
What is the net present value of the project? River Rocks, Inc., is considering a project...

What is the net present value of the project? River Rocks, Inc., is considering a project with the following projected free cash flows: Year 1 2 3 Cash Flow - $50.9 $10.3 $19.6 $20.3 (in millions) 4 $20. $15.2 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. River Rocks' WACC is 12.8%. Should it take on this project? Why or why not? Tuul O B. Cash Flows...

RiverRocks, whose WACC is 11.7 11.7 %, is considering an acquisition of Raft Adventures (whose WACC is 15.6 15.6 %). The purchase will cost $ 100.7 $100.7 million and will generate cash flows that sta...

RiverRocks, whose WACC is 11.7 11.7 %, is considering an acquisition of Raft Adventures (whose WACC is 15.6 15.6 %). The purchase will cost $ 100.7 $100.7 million and will generate cash flows that start at $ 14.6 $14.6 million in one year and then grow at 3.7 % 3.7% per year forever. What is the NPV of the acquisition? The net present value of the project ? million. (Round to two decimal places.)
Alpha Enterprises, Inc. is considering a project that has the following cash flows: Year Cash Flow...

Alpha Enterprises, Inc. is considering a project that has the following cash flows: Year Cash Flow 0 -$1,000 1 500 2 300 3 700 4 400 The company’s WACC is 10%. What is the project’s ordinary payback?
1. Allen Inc., is considering a project with the following cash flows. Year Cash Flows 0...

1. Allen Inc., is considering a project with the following cash flows. Year Cash Flows 0 -$32,374 1 $6,334 2 $13,790 3 $12,995 4 $20,673 5 $29,260 The company uses a discount rate of 7 percent on all of its projects. Calculate the profitability index of the project? 2. Elway Corp. is considering a project with the following cash flows. Year Cash Flows 0 -$45,331 1 $15,903 2 $24,490 3 $34,625 4 -$11,486 5 $40,937 The company uses a discount...

1. Sanders Inc., is considering a project with the following cash flows. Year Cash Flows 0...

1. Sanders Inc., is considering a project with the following cash flows. Year Cash Flows 0 -$50,000 1 $10,659 2 $15,437 3 $45,103 4 $75,074 5 $250,682 What is the regular payback period for this project? [Enter the final answer in as a decimal (e.g. 5.55) - not a percent] 2. Sanders Inc., is considering a project with the following cash flows. Year Cash Flows 0 -$50,000 1 $10,988 2 $15,644 3 $20,216 4 $40,031 5 $133,490 What is the...
Alpha Enterprises, Inc. is considering a project that has the following cash flows: Year: Cash Flow;...

Alpha Enterprises, Inc. is considering a project that has the following cash flows: Year: Cash Flow; 0: -$1,000 1: 500 2: 300 3: 900 4: 400 The company’s WACC is 10%. What is the project’s ordinary payback? Enter your answer rounded to two decimal places.
Calculate the (regular) payback for a project with the following projected cash flows: Year Cash Flow ...

Calculate the (regular) payback for a project with the following projected cash flows: Year Cash Flow 0 -2,500 1 600 2 1300 3 766 4 600 Assume the risk-adjusted WACC is 8.6%. Enter your answer as a number with 2 decimal places of precision (i.e. 1.23)

Calculate the discounted payback for a project with the following projected cash flows: Year Cash Flow ...

Calculate the discounted payback for a project with the following projected cash flows: Year Cash Flow 0 -2,500 1 600 2 1300 3 827 4 600 Assume the risk-adjusted WACC is 8.4%. Enter your answer as a number with 2 decimal places of precision (i.e. 1.23) Do not round intermediate calculations (PVs)