Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's projected NPV is negative, it should be rejected.
WACC:  11.00%  
Year  0  1  2  3 
Cash flows  $1,000  $500  $500  $500 









The correct answer is e 0221.86
Net Present Value (NPV) = Present value of cash inflows  Initial
Investment.
NPV ( Decision making rule)
As the NPV of the project is positive it should be accepted.
Note  How did we calculate the discounting factors @11%
Year 0 = The discounting factor is always 1.
Year 1 = 1/1.11
= 0.9009
Year 2 = 0.9009/1.11
= 0.8116
Year 3 = 0.8116/1.11
= 0.7312
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