If NPV is zero, then IRR is ………… WACC单项选择题

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Assume a project is independent with financing cash flows. Which one of these statements is correct?

Part 1Consider a project with free cash flows in one year of $ 130,640$130,640 in a weak market or $ 195,910$195,910 in a strong​ market, with each outcome being equally likely. The initial investment required for the project is $ 85,000$85,000​, and the​ project's unlevered cost of capital is 20 %20%. The​ risk-free interest rate is 4 %4%. ​(Assume no taxes or distress​ costs.)a. What is the NPV of this​ project?b. Suppose that to raise the funds for the initial​ investment, the project is sold to investors as an​ all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this waylong dash—that ​is, what is the initial market value of the unlevered​ equity? c. Suppose the initial $ 85,000$85,000 is instead raised by borrowing at the​ risk-free interest rate. What are the cash flows of the levered equity in a weak market and a strong market at the end of year​ 1, and what is its initial market value of the levered equity according to​ MM? Part 1a. The NPV is ​$[input]51,063 51,063. ​(Round to the nearest​ dollar.)Part 2b. The initial market value of the unlevered equity is ​$[input]enter your response here . ​(Round to the nearest​ dollar.)

Part 1Whitewater Limited is considering a project with the following projected free cash​ flows:[table] Year | 0 | 1 | 2 | 3 | 4 Cash Flow ​(in millions) | negative $ 49.5−$49.5 | $ 9.4$9.4 | $ 19.6$19.6 | $ 19.3$19.3 | $ 15.8$15.8 [/table]The firm believes​ that, given the risk of this​ project, the WACC method is the appropriate approach to valuing the project.​ Whitewater's WACC is 12.8 %12.8%. Should it take on this​ project? Why or why​ not? Part 1The timeline for the​ project's cash flows​ is: ​(Select the best choice​ below.) A. Cash flow left parenthesis millions right parenthesisCash flow (millions)negative $ 49.5−$49.5$ 9.4$9.4$ 19.6$19.6$ 19.3$19.3$ 15.8$15.8 YearYear0011223344 B. Cash flow left parenthesis millions right parenthesisCash flow (millions)$ 49.5$49.5negative $ 9.4−$9.4negative $ 19.6−$19.6negative $ 19.3−$19.3negative $ 15.8−$15.8 YearYear0011223344 C. Cash flow left parenthesis millions right parenthesisCash flow (millions)negative $ 49.5−$49.5negative $ 9.4−$9.4negative $ 19.6−$19.6negative $ 19.3−$19.3negative $ 15.8−$15.8 YearYear0011223344 D. Cash flow left parenthesis millions right parenthesisCash flow (millions)$ 49.5$49.5$ 9.4$9.4$ 19.6$19.6$ 19.3$19.3$ 15.8$15.8 YearYear0011223344

Researchers at Jonathon’s Organic Pesticides have made a breakthrough.  They believe they can produce a new fertilizer at a substantial cost saving over the company’s existing line of fertilizer.  The new fertilizer will require a plant that can be built immediately for $70 million.  Financial managers estimate that the benefits of the new fertilizer will be $8 million per year, starting at the end of the first year and lasting for five years. After five years, the benefits are expected to grow by 3% a year forever. Assume the discount rate is 12%.  Frederick’s is currently all-equity financed, with a stock price of $25 per share and 4 million shares outstanding. ​ They plan to announce the project in a press release at 3:45 PM today. What is the expected stock price reaction to the announcement?

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