Question
Your boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two proposed projects: Project L and Project S. Both
Your boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two proposed projects: Project L and Project S. Both projects have 3-year lives.
After-tax cash flows (in millions of dollars):
| Year | CFL | CFS |
| 0 | ($100) | ($100) |
| 1 | $10 | $70 |
| 2 | $60 | $50 |
| 3 | $80 | $20 |
Use the weighted average cost calculated in question 6 above.
What is the NPV of Project L?
| a. | approximately $20 million | |
| b. | approximately $14 million | |
| c. | approximately $200 million | |
| d. | approximately $110 million |
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Money Talks Explaining How Money Really Works
Authors: Nina Bandelj ,Frederick F. Wherry ,Viviana A. Zelizer
1st Edition
0691202893, 978-0691202891
