Last Month,Smith Systems Inc ​
A)$57

question 52

Multiple Choice

Last month,Smith Systems Inc.decided to accept the project whose cash flows are shown below.However,before actually starting the project,the Bank of Canada took actions that lowered interest rates and therefore Smith's WACC.By how much did the change in the WACC affect the project's forecasted NPV? Assume that the Bank of Canada's action does not affect the cash flows.​​ $\begin{array}{lcccc}\text { New WACC: } & 8.00 \% & \text { Old WACC: } & 11.00 \% & \\\text { Year: } & 0 & 1 & 2 & 3 \\\text { Cash flows: } & -\$ 1,000 & \$ 500 & \$ 500 & \$ 500\end{array}$ ​

• A)$57.18
• B)$60.19
• C)$63.36
• D)$66.69

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Definitions:

Increases Dramatically

A significant and rapid rise or growth in quantity, level, or rate.

Cognitive Development

The construction of thought processes, including remembering, problem solving, and decision-making, from childhood through adulthood.

Jean Piaget

A Swiss psychologist known for his pioneering work in the development of child psychology, particularly in his theories of cognitive development and epistemological view called "genetic epistemology."

Theory

A systematically organized set of concepts, explanations, and propositions that explain or predict events or situations by specifying relations among variables.