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Cornell Enterprises is considering a project that has the following cash flow and WACC data. What...

Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC: 10.00% Year 0 1 2 3 Cash flows -$1,275 $450 $460 $470

Solutions

Expert Solution

Project should be rejected
Statement showing Cash flows
Particulars Time PVf 10% Amount PV
Cash Outflows                          -                           1.00                 (1,275.00)           (1,275.00)
PV of Cash outflows = PVCO           (1,275.00)
Cash inflows                     1.00                    0.9091                       450.00                 409.09
Cash inflows                     2.00                    0.8264                       460.00                 380.17
Cash inflows                     3.00                    0.7513                       470.00                 353.12
PV of Cash Inflows =PVCI             1,142.37
NPV= PVCI - PVCO              (132.63)

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