Question
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in millions) $50.5 $10.5
RiverRocks, Inc., is considering a project with the following projected free cash flows:
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash Flow (in millions) | $50.5 | $10.5 | $19.1 | $19.5 | $14.9 |
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 11.4%.
Should it take on this project? Why or why not?
2. The net present value of the project is $______ million.(Round to three decimal places.)
3. RiverRocks (should or should not) take on this project because the NPV is (positive or negative).
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
