Question
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in millions) $50.3 $10.6
RiverRocks, Inc., is considering a project with the following projected free cash flows:
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash Flow (in millions) | $50.3 | $10.6 | $19.2 | $20.9 | $15.2 |
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.7%.
Should it take on this project? Why or why not?
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Financial Institutions And Markets
Authors: Jeff Madura
10th International Edition
0538482176, 9780538482172
