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A firm earns the following cash flows. What discount rate (WACC) would cause the firm to...

  1. A firm earns the following cash flows. What discount rate (WACC) would cause the firm to be indifferent between accepting and rejecting the firm if the initial investment were $500?
    • Year:      CF
    • 1              90
    • 2              120
    • 3              190
    • 4              160
    • 5              60
  • 7.80%
  • 7.11%
  • 7.34%
  • 7.66%

Solutions

Expert Solution

So the WACC at which the firm would be indifferent is 7.66%

Formulae

jeff jeffy answered 2 years ago
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