Question
Projects S and L both have an initial cost of $10,000, followed by a series of positivecash inflows. Project Ss undiscounted net cash flows total
Projects S and L both have an initial cost of $10,000, followed by a series of positivecash inflows. Project Ss undiscounted net cash flows total $20,000, while Ls
totalundiscounted flows are $30,000. At a WACC of 10%,
the two projects haveidentical NPVs.
Which projects NPV is more sensitive to changes in the WACC?
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Financial Accounting
Authors: Jeffrey Waybright, Robert Kemp, Sherif Elbarrad
2nd Canadian edition
133375536, 9780133845396, 133845397, 978-0133375534
