Project's NPV = 0

It means that:

Group of answer choices

a. profit of the project is zero

b. FCF of the firm is zero

c. leverage of the firm is zero

d. bond and stock holders received their required returns

HolyCow accepted project Novi:

• Initial Investment = $15 million
• NPV = $20 Million

How much is added by project Novi to the value of HolyCow?

$35 million

$20 million

$15 million

$5 million

Who has the highest NPV?

[Intial FCF₀ and FCF₁ and life of the projects being equal]

WACC Growth of FCFs

Jimmy: 12% 10%

Johnny 12% 8%

Jenny 11% 10%

Julie 11% 8%

Jimmy

Johnny

Jenny

Julie

Project Hampton has

• IRR = 12.0%.
• 100% of acquisition cost was financed by issuing bonds with YTM = 9.0%,
• the project WACC = 15.0%.

The NPV of Hampton is:

negative

zero

positive

can't be sure