Suppose Praxis Corporation’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years. Year Cash Flow Year 1 $375,000 Year 2 500,000 Year 3 425,000 Year 4 475,000   If the project’s weighted average cost of capital (WACC) is 8%, what is its NPV? $374,910   $412,401   $431,146   $299,928

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter10: Capital Budgeting: Decision Criteria And Real Option
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Suppose Praxis Corporation’s CFO is evaluating a project with the following cash inflows. She does not know the project’s initial cost; however, she does know that the project’s regular payback period is 2.5 years.
Year
Cash Flow
Year 1 $375,000
Year 2 500,000
Year 3 425,000
Year 4 475,000
 
If the project’s weighted average cost of capital (WACC) is 8%, what is its NPV?
$374,910
 
$412,401
 
$431,146
 
$299,928
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