Author Question: Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is ... (Read 16 times)

petersan · **on:** Aug 7, 2023

Question 1

Flint Fruits is considering two equally risky, mutually exclusive projects, Projects A and B, that have the following cash flows:

Year	Project A	Project B
0	–$130,000	–$130,000
1	52,000	40,000
2	40,000	25,000
3	80,000	93,000
4	50,000	71,000

At what WACC would the two projects have the same NPV?

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10.06%

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10.73%

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11.21%

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11.82%

Question 2

Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback?

WACC:	10.00%
Year:	0	1	2	3
Cash flows:	–$1,300	$600	$600	$600

◦

2.01 years

◦

2.14 years

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2.38 years

◦

2.57 years

3ginamay · **Reply #1 on:** Aug 7, 2023

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