Activity 18 Capital Budgeting: Net Present Value (NPV) The purpose of this assignment is to practice capital budgeting via NPV calculation. Group Number Class meeting Morning / Afternoorn You are asked to evaluate a new tractor project for Deere. The engineers and marketing and accounting folks have pooled their efforts to generate the following expectations about the project's cash flows (FCFF). The WACC = 10%. t-0 1 4 9 10 CF 30 40 50 40 50 50 30 30 20 10 -200 What is the NPV of the project? You are a major grocery chain (Fine Foods R Us) and are now contemplating starting a food truck supply service. You will prepare (pre-cook and then freeze or chill) 'small plates' - like Tapas, which will then be sold to owners of food trucks. The start-up cost is $120 million. Your financial analysts calculate that the operation will produce free cash flow (FCFF) of $7million the 1st year, and that this free cash flow will grow by 10% over the following 25 years (i.e., g=10% for t through t-26). After that, free cash flow is expected to grow at a constant rate of 4% forever Your WACC for this project is 8%, what is the project's NPV? USE TVM FORMULAS