Warnock Inc. is considering a project that has the following cash flow and WACC data.
10. Warnock Inc. is considering a project that has the following cash flow and WACC data. What is the project’s NPV? Note that a project’s expected NPV can be negative, in which case it will be rejected.
| WACC: | 10.00% | |||
| Year | 0 | 1 | 2 | 3 |
| Cash flows | -$950 | $500 | $400 | $300 |
| 11. Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. |
12. Mansi Inc. is considering a project that has the following cash flow data. What is the project’s payback?
| Year | 0 | 1 | 2 | 3 |
| Cash flows | -$750 | $300 | $325 | $350 |
13. Which of the following statements is CORRECT?
14. Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true?
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