Question: RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in millions) $50.8 $10.4
RiverRocks, Inc., is considering a project with the following projected free cash flows:
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash Flow (in millions) | $50.8 | $10.4 | $19.1 | $19.9 | $15.9 |
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is
11.4%.
Should it take on this project? Why or why not?
The timeline for the project's cash flows is: (Select the best choice below.)

The timeline for the project's cash flows is: (Select the best choice below.) A. Cash Flows (millions) - $50.8 $19.9 $15.9 $10.4 + 1 $19.1 + 2 0 3 3 4 Year O B. Cash Flows (millions) $50.8 - $10.4 - $19.9 - $15.9 - $19.1 + Year 0 1 N 4 O C. Cash Flows (millions) - $50.8 - $10.4 - $19.1 - $19.9 - $15.9 Year 0 1 2 3 4 OD. Cash Flows (millions) $50.8 $15.9 $10.4 + 1 $19.1 + 2 $19.9 + 3 Year 0 4 The net present value of the project is $million. (Round to three decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
