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Company Y has conducted a risk assessment on a project it is considering. The company adjusts its WACC by adding a risk premium based
Company Y has conducted a risk assessment on a project it is considering. The company adjusts its WACC by adding a risk premium based on the coefficient of variation of a project as follows: CV 0%-50% 50%-70% 71%-90% Adjustment -1% 0% 3% The project has a coefficient of variation of 80% associated with it. The project has the following net cash flows associated with it: Year O -R100 Year 1 R50 Year 2 R20 Year 3 R30 Year 4 R40 Year 5 R60 The company has a WACC of 15%. What is the risk adjusted NPV of the project?
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