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Author Question: Projects S and L both have an initial cost of $20,000, followed by a series of positive cash ... (Read 37 times)

warrenjean01

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on: Aug 7, 2023
Projects S and L both have an initial cost of $20,000, followed by a series of positive cash inflows. Project S’s undiscounted net cash flows total $30,000, while L’s total undiscounted flows are $40,000. At a WACC of 11%, the two projects have identical NPVs. Which project’s NPV is less sensitive to changes in the WACC?

◦

Project S


◦

Project L


◦

Both projects are equally sensitive to changes in the WACC since their NPVs are equal at all costs of capital.


◦

Neither project is sensitive to changes in the discount rate, since both have NPV profiles that are horizontal.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by warrenjean01 on Aug 7, 2023

butterfly17

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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warrenjean01

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

nguyenhoanhat

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Reply 3 on: Yesterday
Excellent

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