Question: Last month, Channing Systems analyzed a project whose cash flows are shown below. However, before the decision to accept or reject the project took place,

Last month, Channing Systems analyzed a project whose cash flows are shown below. However, before the decision to accept or reject the project took place, the Federal Reserve 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 and the firm's decision?

Old WACC: 8.00%New WACC: 11.25%

Year0123

Cash flows-$1,000$410$410$410

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