Question
Your division is considering two projects with the following cash flows. Project A costs $250 million and has cash flows of $155 million in year
Your division is considering two projects with the following cash flows. Project A costs $250 million and has cash flows of $155 million in year 1, $120 million in year 2, and $75 million in year 3. Project B costs $160 million and has cash flows of $100 million in year 1, $90 million in year 2, and $50 million in year 3. By how much would Project B's net present value change if the WACC increased from 10% to 15%?
A. NPV would decrease by $12.22 million
B. NPV would decrease by $14.97 million
C. NPV would decrease by $16.91 million
D. NPV would decrease by $19.88 million
E. NPV would decrease by $22.25 million
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