Thomson Electric Systems is considering a project that has the followi
QUESTION
Thomson Electric Systems is considering a project that has the following cash flow and WACC data. What is the projects NPV? Note that a projects projected NPV can be negative, in which case it will be rejected. WACC = 10%
To find NPV, we must find the PV of our 3 CFs discounted at 10% and add this amount to our initial investment to find our NPV. Discounted our three CFs at 10% to today we get a PV of those CFs of $1,243.43 It costs us -$1000 to
enerate those CFs so if we add those together we get a NPV of $243.43 In this case we would accept this project b/c the NPV is positive. Hope this helps!
ANSWER:
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