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Calculate proposals npv

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Reference no: EM13516892

Waldrup Industries is considering a proposal for a joint venture that will require an investment of C$13 million. At the end of the fifth year, Waldrup"s joint venture partner will buy out Waldrup"s interest for C$10 million. Waldrup"s chief financial officer has estimated that the appropriate discount rate for this proposal is 12 percent. The expected cash flows are given below.

Year

Cash Flow

0

-C$13,000,000

1

C$3,000,000

2

C$3,000,000

3

C$3,000,000

4

C$3,000,000

5

C$10,000,000

A. Calculate this proposal"s NPV.

B. Make a recommendation to the CFO (chief financial officer) concerning whether Waltham should enter into this joint venture.

Reference no: EM13516892

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