Babcock Inc.is considering a project that has the following cash flow and WACC data.What is the project's NPV? $\begin{array}{cccc}
\text { WACC } &10.00 \% \
\text { Year: } & 0 & 1 & 2 & 3 \
\hline \text {Cash flows: } &-\$ 950 & \$ 500 & \$ 400 & \$ 300
\end{array}$
A)$54.62
B)$57.49
C)$60.52
D)$63.54

Question

Babcock Inc.is considering a project that has the following cash flow and WACC data.What is the project's NPV? $\begin{array}{cccc}
 \text { WACC } &10.00 \% \
 \text { Year: } & 0 & 1 & 2 & 3 \
\hline  \text {Cash flows: } &-\$ 950 & \$ 500 & \$ 400 & \$ 300
\end{array}$
A)$54.62
B)$57.49
C)$60.52
D)$63.54

Quizplus · Accepted Answer

The NPV (Net Present Value) is calculated using the formula: $NPV = \sum \frac{CF_t}{(1 + r)^t}$, where $CF_t$ is the cash flow at time t, and r is the discount rate (WACC in this case). Plugging in the values: $NPV = -950 + \frac{500}{(1 + 0.1)^1} + \frac{400}{(1 + 0.1)^2} + \frac{300}{(1 + 0.1)^3} = -950 + 454.55 + 330.58 + 225.39 = 60.52$.

Babcock Inc A)$5462 B)$57

Babcock Inc A)$5462
B)$57