RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in
-
- Site Admin
- Posts: 899603
- Joined: Mon Aug 02, 2021 8:13 am
RiverRocks, Inc., is considering a project with the following projected free cash flows: Year 0 1 2 3 4 Cash Flow (in
RiverRocks, Inc., is considering a project with the followingprojected free cash flows: Year 0 1 2 3 4 Cash Flow (in millions)−$50.8 $9.1 $19.8 $20.3 $14.1 The firm believes that, given therisk of this project, the WACC method is the appropriate approachto valuing the project. RiverRocks' WACC is 12.1%. Should it takeon this project? Why or why not? The timeline for the project'scash flows is: (Select the best choice below.) A. The timelinestarts at Year 0 and ends at Year 4. It shows cash flows of -$ 50.8in Year 0, -$ 9.1 in Year 1, -$ 19.8 in Year 2, -$ 20.3 in Year 3,and -$ 14.1 in Year 4. The cash flow amounts are in millions ofdollars. Cash Flows (millions)−$50.8−$9.1−$19.8−$20.3−$14.1Year01234 B. The timeline starts at Year 0 and ends at Year 4. Itshows cash flows of $ 50.8 in Year 0, $ 9.1 in Year 1, $ 19.8 inYear 2, $ 20.3 in Year 3, and $ 14.1 in Year 4. The cash flowamounts are in millions of dollars. Cash Flows(millions)$50.8$9.1$19.8$20.3$14.1 Year01234 C. The timeline startsat Year 0 and ends at Year 4. It shows cash flows of negative $50.8 in Year 0, $ 9.1 in Year 1, $ 19.8 in Year 2, $ 20.3 in Year3, and $ 14.1 in Year 4. The cash flow amounts are in millions ofdollars. Cash Flows (millions)−$50.8$9.1$19.8$20.3$14.1 Year01234D. The timeline starts at Year 0 and ends at Year 4. It shows cashflows of $ 50.8 in Year 0, -$ 9.1 in Year 1, -$ 19.8 in Year 2, -$20.3 in Year 3, and -$ 14.1 in Year 4. The cash flow amounts are inmillions of dollars. Cash Flows(millions)$50.8−$9.1−$19.8−$20.3−$14.1 Year0123