Question: Lielo Eye Inc. recently analyzed the project whose cash flows are shown below. However before Cielo decided to accept or reject the project, the Federal

Lielo Eye Inc. recently analyzed the project whose cash flows are shown below. However before Cielo decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firms WACC. The Feds action did not affect the forecasted cash flows. By how much did the change in the WACC affect the projects forecasted NPV? (Hint: Change in WACC = New NPV minus Old NPV) Old WACC: 8.00% New WACC: 9.75% Year 1 2 3 Cash flow-$1000 $410 310 $710

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