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.
A) $92.37
B) $96.99
C) $101.84
D) $106.93
E) $112.28

Question

Quizplus · Accepted Answer

The correct answer is A because the NPV of the project is $92.37. The NPV is calculated by taking the present value of the cash flows and subtracting the initial investment. The present value of the cash flows is calculated by multiplying each cash flow by the discount factor, which is 1 / (1 + WACC)^n, where n is the number of years from the present. The WACC is the weighted average cost of capital, which is the average cost of the company's debt and equity financing.

Cornell Enterprises Is Considering a Project That Has the Following