Last Month,Lloyd's Systems Analyzed the Project Whose Cash Flows Are

question 98

Multiple Choice

Last month,Lloyd's Systems analyzed the project whose cash flows are shown below.However,before the decision to accept or reject the project,the Federal Reserve took actions that changed interest rates and therefore the firm's WACC.The Fed's action did not affect the forecasted cash flows.By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative,in which case it should be rejected. $$\begin{array} { l c c c c } \text { Old WACC: } & 10.00 \% &{ \text { New WACC: } 9.50 \% } \\\text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 1,000 & \$ 410 & \$ 410 & \$ 410\end{array}$$

• A) 0$9.04
• B) 0$11.12
• C) 0$10.22
• D) 0$10.85
• E) 0$10.13

---

Definitions:

American Recovery and Reinvestment Act

A stimulus package enacted by the U.S. Congress in 2009 to revive the economy by spurring job creation and investing in critical sectors.

Data Breaches

Unauthorized access to confidential information held by an organization, leading to potential privacy violations and security issues.

HIPAA Compliance

Adherence to the regulations set by the Health Insurance Portability and Accountability Act, focusing on protecting patient health information.

Healthcare Professionals

Individuals involved in providing health care services, such as doctors, nurses, pharmacists, and therapists.