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 4 times)

majortom123 · **on:** Aug 7, 2023

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

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$440.43

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$466.23

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$470.38

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$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?

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

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

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

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

Khareemom14 · **Reply #1 on:** Aug 7, 2023

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