Calco is a multi-divisional firm with a weighted cost of capital of 14 percent and a risk-adjusted
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Question
Calco is a multi-divisional firm with a weighted cost of capital of 14 percent and a risk-adjusted discount rate for its can division of 17 percent. A planned expansion in the can division requires a net investment of $170,000 and results in expected cash inflows of $42,000 a year for seven years. Should Calco invest in this expansion?
a. Yes, NPV = $10,096 |
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b. Yes, NPV = $ 9,896 |
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c. No, NPV = -$5,276 |
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d. No, NPV = -$9,896 |
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