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Suppose the WACC of Company A is 15%, and the company is currently evaluating a new project which is in the main business area of
Suppose the WACC of Company A is 15%, and the company is currently evaluating a new project which is in the main business area of the company. The cash flows of the project are given in the following table: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 -$250,000 $80,000 $20,000 $120,000 $25,000 $60,000 Should the company accept the project? Why? O Cannot determine because we don't know the appropriate discount rate to evaluate the project. O Accept the project because the net cash inflow of the project is $55,000. O Accept the project because NPV = -$42,285.53. O Reject the project because NPV = -$42,285.53
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