The Federal Reserve recently shifted its monetary policy causing Lasik Vision’s WACC to change. Lasik had recently analyzed the project whose cash flow are shown below. However, the CFO wants to reconsider this and all other proposed projects in view of the Fed action. How much did the changed WACC caused forecasted and NVP to change? assume that the Fed action does not affect the cash flows and note that a project’s projected NPV can be negative, in which case it should be rejected. (Hint: you need to find the NPVs under WACC = 7% and 10%). New WACC= 7% Old WACC= 10% Year: 0 1 2 3 Cash flows: ($1,000) $500 $

The Federal Reserve recently shifted its monetary policy causing Lasik Vision’s WACC to change. Lasik had recently analyzed the project whose cash flow are shown below. However, the CFO wants to reconsider this and all other proposed projects in view of the Fed action. How much did the changed WACC caused forecasted and NVP to change? assume that the Fed action does not affect the cash flows and note that a project’s projected NPV can be negative, in which case it should be rejected. (Hint: you need to find the NPVs under WACC = 7% and 10%). New WACC= 7% Old WACC= 10% Year: 0 1 2 3 Cash flows: ($1,000) $500 $

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 6ST

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Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected.Old WACC: 8.00% New WACC: 11.25% Year 0 1 2 3Cash flows -$1,000 $410 $410 $410 -$56.60 -$50.61 -$59.02 -$48.04
Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: 8.00% New WACC: 9.75% Year 1 2 3 Cash flows -$1,000 $410 $410 $410 a. -$32.50 O b. -$30.55 O c. -$28.60 O d. -$29.25 O e. -$34.12
Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided toaccept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm'sWACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect theproject's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected.Old WACC: 8.00% New WACC: 11.25%Year 0 1 2 3Cash flows −$1,000 $410 $410 $410
Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC: 8.00% New WACC: 9.75% Year 0 1 2 3 Cash flows -$1,000 $410 $410 $410 Select one: a. -$29.25 b. -$34.12 c. -$28.60 d. -$32.50 e. -$30.55 Clear my choice
A company recently analyzed the project whose cash flows are shown below. However, before the company decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. The old WACC is 8.00% and the new WACC is 9.75% Year 0. 1 3. Cash -$1,000 $410 $410 $410 flows 2.
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