Question

ABC Company 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: 11.00% Year 0 1 2 3 4 5 Cash flows -$1,100 $400 $390 $380 $370 $200

Answer 1

Solution:

Project NPV = 400/(1.10)^1 + 390/(1.10)^2 + 380/(1.10)^3 + 370/(1.10)^4 + 200/(1.10)^5 - 1100*1

Project NPV = $248.35