The Federal Reserve recently shifted its monetary policy, causing Lasik Vision\'

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 will not affect the cash flows, and note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC = 10% New WACC = 8% Year: 0 1 2 3 Cash flows: -$1,000 $500 $520 $540 Answer $47.44 $59.45 $68.57 $74.16 $84.16

Explanation / Answer

on solving the above question the changed WACC cause the forecasted NPV to change equals to $47.44

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