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Company A has a WACC of 14% and a tax rate of 30%
Company A has a WACC of 14% and a tax rate of 30%. The company is evaluating an investment of SEK 400,000. The Investment is estimated to give rise to an increased annual FCF (free cash flow) of SEK 80,000. In addition, estimates that a buyer will pay the residual value of 20,000 after five years. The company writes off according to 20 cegein. What will be the NPV of the investment? Rounded answers options: 1.-86 2. 14 3.-26 I 4.-118
Expert Solution
Given information
WACC = 14%
Initial investment = SEK 400,000
Increased annual cash flows = SEK 80,000 per year
Net NPV is -118
means option 4 is correct
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