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Author Question: Energy Project Beta has the following cash flows:CF 0 $4,500CF 1 $0CF 2 $0CF 3 $1,200CF 4 $3,400CF 5 ... (Read 93 times)

majortom123

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Question 1

Edmondson Electric Systems is considering a project that has the following cash flow and WACC data. What is the project’s NPV?
        
 WACC:11.00%    
 Year:

0

1

2

3

 Cash flows:

–$1,000

$600

$600

$600

        

$440.43


$466.23


$470.38


$478.80



Question 2

Energy Project Beta has the following cash flows:

CF 0 –$4,500
CF 1 $0
CF 2 $0
CF 3 $1,200
CF 4 $3,400
CF 5 $7,500

 

If this project has a required rate of return of 11%, will management accept or reject the project?


Management would reject the project because there are no positive cash flows in years 1 and 2.


Management would accept the project because the project has an NPV of $5,000.


Management would accept the project because the project has an NPV of $4,147.


Management would accept the project because the project has an NPV of $3,068.



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Marked as best answer by majortom123 on Aug 7, 2023

Khareemom14

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majortom123

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


amynguyen1221

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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