Scott Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that if a project's expected NPV is negative,it should be rejected.
A)$77.49
B)$81.56
C)$85.86
D)$90.15
E)$94.66

Question

Scott Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that if a project's expected NPV is negative,it should be rejected. 
A)$77.49 
B)$81.56 
C)$85.86 
D)$90.15 
E)$94.66

Quizplus · Accepted Answer

To find the NPV, we need to discount the cash flows using the WACC.

Using the formula:
NPV = CF/(1+r)^t

where CF is cash flow, r is the discount rate (WACC), and t is the time period, we get:

NPV = -400/(1+0.09)^1 + 100/(1+0.09)^2 + 200/(1+0.09)^3 + 300/(1+0.09)^4 + 600/(1+0.09)^5

NPV = $85.86

Since the NPV is positive, we should accept the project. Therefore, the best choice is C.

Scott Enterprises Is Considering a Project That Has the Following