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

Last month, Standard Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project took place, the banks have changed interest rates and therefore the firm's WACC. The Bank's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's expected NPV can be negative, in which case it should be rejected. OLD WACC 10.00% New WACC 11.25% Year 0 1 2 3 Cash Flows -Rs. 1,000 Rs. 410 Rs. 410 Rs. 410

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