Final Clearance Inc. recently analyzed the project whose cash flows are shown below. However, before Finals...

 

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Final Clearance Inc. recently analyzed the project whose cash flows are shown below. However, before Finals decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Old WACC: 7.50% Year Cash flows $93.64 -$93.64 $0.00 $102.54 -$102.54 0 -$11,000 New WACC: 8.00% $4,200 2 $4,300 3 $4,500 Final Clearance Inc. recently analyzed the project whose cash flows are shown below. However, before Finals decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Old WACC: 7.50% Year Cash flows $93.64 -$93.64 $0.00 $102.54 -$102.54 0 -$11,000 New WACC: 8.00% $4,200 2 $4,300 3 $4,500

Answer rating: 100% (QA)

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