Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Category T0 T1 T2
Question:
Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line:
Category | T0 | T1 | T2 | T3 | ||
Investment | −$11,043,441 | |||||
Net working capital change | −$628,000 | $628,000 | ||||
Operating cash flow | $3,755,000 | $4,377,000 | $4,992,000 | |||
Salvage | $625,000 | |||||
At what adjusted WACCs will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.
What is the IRR of the project?
enter your response here%
(Round to two decimal places.)
At what adjusted WACCs will the company accept this project? (Select the best response.) A or B
A.The company will accept this project if the adjusted WACC is greater than the IRR calculated above.
or
B. The company will accept this project if the adjusted WACC is no more than the IRR calculated above.
Expert Answer:
Physics
ISBN: 978-0077339685
2nd edition
Authors: Alan Giambattista, Betty Richardson, Robert Richardson
