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Last month, Loyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal

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Last month, Loyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPU can be negative, in which case it should be rejected. Old WACC 11.25% 12.50% 0 Year 1 New WACC 2 $490 3 Cash flows $1,000 5490 $490 125.37 b. 52447 113.64 d. 33519 31468

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