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Author Question: Babcock Inc. is considering a project that has the following cash flow and WACC data. What is the ... (Read 28 times)

jordangardner

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on: Aug 7, 2023

Question 1

Aubey Inc. is considering two projects that have the following cash flows:

​

​

​

Project 1

Project 2

Year

Cash Flow

Cash Flow

0

–$2,300

–$2,100

1

600

1,300

2

800

1,200

3

1,100

900

4

1,200

700

5

1,400

600

​

​

At what cost of capital would the two projects have the same NPV?


◦

2.73%


◦

3.85%


◦

4.51%


◦

5.50%



Question 2

Babcock Inc. is considering a project that has the following cash flow and WACC data. What is the project’s NPV?

WACC:11%   
Year:

0

1

2

3

Cash flows:

–$950

$600

$400

$200


◦

$31.43


◦

$37.49


◦

$40.52


◦

$43.54

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

dianagarcia

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Reply #1 on: Aug 7, 2023
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jordangardner

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Reply 2 on: Aug 7, 2023
Gracias!

xiazhe

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Reply 3 on: Yesterday
Wow, this really help

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