Question: A firm is considering three projects, each with an initial outlay of $30,000. The firm's WACC is 8%. Project A has cash flows of $10,000

A firm is considering three projects, each with an initial outlay of $30,000. The firm's WACC is 8%. Project A has cash flows of $10,000 in year one, $5,000 in year two and in year three and $20,000 in year four. Project B has cash flows of $16,000 for years one, two and four and negative $16,000 in year three. Project C has one cash flow of $44,000 in year four. Which project would benefit most from an additional $10,000 inflow in year two?

Project A
Project B
Project C
All projects benefit equally from the additional $8,573.39 to NPV

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!