Question
You are tasked with evaluating a riskier-than-average capital budgeting project with the following cash flows.The project will initially cost $372.In Year 1, there will be
You are tasked with evaluating a riskier-than-average capital budgeting project with the following cash flows.The project will initially cost $372.In Year 1, there will be a cash inflow of $159.30.In Year 2 there will be a cash inflow of $193.20.In Year 3 there will be a cash inflow of $154.80.In Year 4 there will be a cash inflow of $110.40.The company has a WACC of 14%.They add 3% to WACC for risky projects and they subtract 3% from WACC for less risky projects.Graph the NPV profile of this project, using the following values for WACC: 0%, 10%, 20%, 30% and 40%.It is only necessary to show your work for one of the NPV calculations. Don't forget that your graph must include labels and scales for the axes. On the graph, indicate IRR with a star.
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