- Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $816,822, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?
- A new grocery store cost $30 million in initial investment. It is estimated that the store will generate after-tax cash flows of $2 million each year for the next 5 years. At the end of the 5 years, it can be sold for $40 million. What is the NPV of the project if the risk-adjusted WACC is 10%?
- Johnson Ltd. determined that the net present value of an investment in technological improvements at its plant in France would be 10,000,000, if pending litigation was resolved in the company’s favor and would be 2,000,000 if the courts ruled against the company. Johnson’s attorneys in France assessed the probability of a favorable ruling at 70%. What is the expected net present value of the project?

A.10,000,000

B. 2,000,000

C. 6,000,000

D. 7,600,000