The NPV of this project using the WACC method is closest to:
A)$10 million
B)$13 million
C)$42 million
D)$71 million

Question

Quizplus · Accepted Answer

B)Since this project is totally debt financed at the risk free rate,the risk free rate of 5% is the before tax WACC.The after tax wacc is the simply r_f(1 - T_c)= 5%(1 - 40%)= 3%. NPV = PV Inflows - Investment = 11ea7cce_3cae_3b51_928c_07cc46d13b2d_TB1626_11 - $150 = 13.11 million

The NPV of This Project Using the WACC Method Is