Question
A project brings the following cash flow to the company. The company uses its WACC (weighted-average cost of capital) as discount rates at 12%. Years
A project brings the following cash flow to the company. The company uses its WACC (weighted-average cost of capital) as discount rates at 12%.
| Years | Start CF | Growth Rate |
| 1-3 | $100,000 | 2% |
| 4-6 | $200,000 | 8% |
| 7- 10 | $80,000 | 1% |
Omit "$" and "," in your answer. Write ONLY numbers. Round to 2 decimal places in all answers submitted.
(1) What is the present value of cash flows from Year 1 to 3?
(2) What is the present value of cash flows from year 4 to 6? (Hint: Discount back to PRESENT, not year 4)
(3) What is the present value of cash flows from year 7 to 10? (4) What is the PV of this project?
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Forecasting Methods And Applications
Authors: Spyros G. Makridakis, Steven C. Wheelwright, Rob J Hyndman
3rd Edition
0471532339, 9780471532330
