Homework SourseYou are evaluating a project with the following expected cas
You are evaluating a project with the following expected cash flows: an initial investment of $9 million, followed by cash flows of $6, $8 and $15 million in years 1, 2 and 3, respectively. If the company\'s WACC is 15%, what is this projects NPV?
Solution
NPV = -9+5.22+6.05+9.86
= $12.13 million
| A | B | A*B | ||
| Year | Project A | 1+r | PVIF | PV |
| 0 | -9.00 | 1.15 | 1.0000 | -9.00 |
| 1 | 6.00 | 0.8696 | 5.22 | |
| 2 | 8.00 | 0.7561 | 6.05 | |
| 3 | 15.00 | 0.6575 | 9.86 | |
| NPV | 12.13 |
