Purchase Solution

Change WACC

Not what you're looking for?

Ask Custom Question

The Federal Reserve recently shifted its monetary policy, causing Lasik Vision's WACC to change. Lasik had recently analyzed the project whose cash flows 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 cause the forecasted NPV 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.

New WACC: 7.00% Old WACC: 10.00%
Year: 0 1 2 3
Cash flows:-$1,000 $500 $520 $540

Purchase this Solution

Solution Summary

The solution computes difference in NPV when WACC changes from 10% to 7%

Purchase this Solution


Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations