Question
Several companies, including Indigo River Technology and White Mountain Food, are considering project A, which is believed by all to have a level of risk
Several companies, including Indigo River Technology and White Mountain Food, are considering project A, which is believed by all to have a level of risk that is equal to that of the average-risk project at Indigo River Technology. Project A is a project that would require an initial investment of 4,005 dollars and then produce an expected cash flow of 5,190 dollars in 4 years. Project A has an internal rate of return of 6.69 percent. The weighted-average cost of capital for Indigo River Technology is 10.16 percent and the weighted-average cost of capital for White Mountain Food is 11.72 percent. What is the NPV that White Mountain Food would compute for project A?
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