MiniMe7

Dreary Wrote:
-------------------------------------------------------
> Quiz:
>
> You have a project which would cost you $100
> million, borrowed at 10% for one year. The
> project has one total cash flow at the end of the
> year of $112 Million. If your interest rate on
> the debt is 10%, your company's WACC is 12% and
> your required rate of return is 14%, should you
> take this project?

I would take this project. Since I am investing only the money I have borrowed, my discount rate would be 10%. This will give me an NPV of 1.82.

Note: I have assumed no taxes since it is not given.