Lasik Vision Inc. recently analyzed the project whose cash flows
are shown below. However, before Lasik decided to accept or reject
the project, the Federal Reserve took actions that changed interest
rates and therefore the firm's WACC. The Fed's action did not
affect the forecasted cash flows. By how much did the change in the
WACC affect the project's forecasted NPV?
Old WACC =
8.00% New WACC
= 8.25%
Year 0 1 2 3
CF -1,000 410 410 410
-$3.66 |
||
-$4.27 |
||
-$4.75 |
||
-$5.46 |
||
-$5.18 |
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