Question
D Co. is expecting a proposed new press to have an installed cost of $10,000 and need $500 in new Net Working Capital. The three
D Co. is expecting a proposed new press to have an installed cost of $10,000 and need $500 in new Net Working Capital. The three year proposed project would have the following Operating Cash Flows: Year 1 @ $3,000; Year 2 @ 4,500; and Year 3 @ 5,500. At the end of three years, the proposed project wold be terminated. The Terminal Cash Flow is expected to be $1,000. D Co, uses a WACC = 9% for similar risk proposed projects. Would this proposed project be acceptable to D Co.? Why or Why Not?
| NPV = - $1,059; No, the owners would be expected to lose wealth. | ||
| NPV = $1,445; Yes, the wealth of owners would be expected to increase. | ||
| NPV = $1,059; Yes, the wealth of owners would be expected to increase. | ||
| NPV = - $1,043; No, the owners would expect to lose wealth. |
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Bitcoin Technical Innovations From The Trenches
Authors: Sjors Provoost
1st Edition
9090360425, 978-9090360423
