Apply WACC in

IRR.

Leeward Sailboats is reviewing the following new boat line:

Category	T0		T1	T2	T3
Investment	$10,699,920
Net working capital change	$581,000				$581,000
Operating cash flow			$3,588,000	$4,123,000	$4,999,000
Salvage					$535,000

At what adjusted WACCs will the company accept this project?

Hint:

Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.

What is the IRR of the project? (Round to two decimal places.)

At what adjusted WACCs will the company accept this project?(Select the best response.)

A. The company will accept this project if the adjusted WACC is no more than the IRR calculated above.

B. The company will accept this project if the adjusted WACC is greater than the IRR calculated above.