Question

Warnock Inc. 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	$500	$400	$300

 a. -$29.61  b. -$40.27  c. -$39.09 d. - $39.48  e. -$47.38

Answer 1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=500/1.1+400/1.1^2+300/1.1^3

=$1010.52

NPV=Present value of inflows-Present value of outflows

=1010.52-1050

=($39.48)(Approx)(Negative).