Question

# QUESTION 1 Year Cash flow 0 -1075 1 350 2 450 3 375 4 300 A...

QUESTION 1

1.  Year Cash flow 0 -1075 1 350 2 450 3 375 4 300

A firm is evaluating a potential capital expenditure project. The project will last for 4 years and has the above expected cash flows. The firm has a WACC of 15%. What is the project's NPV? If NPV is negative, enter the number with a minus sign. Use 2 decimal places

2.  Year Cash flow 0 -1075 1 350 2 450 3 375 4 300

The firm has a WACC of 15%. What is the project's IRR? If IRR is negative, enter the number with a minus sign. Use percent expression with 2 decimal places, e.g., 12.43

3.  Year Cash flow 0 -1075 1 350 2 450 3 375 4 300

What is the project's payback period? Payback period will be positive. Use 2 decimal places, e.g., 12.43.

4. Consider the project in the previous 3 questions. The firm has a WACC of 15%. Based on the NPV method, would you accept or reject this project and why?

 Accept the project because NPV is greater than zero. Reject the project because NPV is less than zero. Accept the project because NPV is greater than WACC. Reject the project because NPV is less than WACC.

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