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Calculate the certainty equivalent NPV

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Question - Wilkerson Endoscopy Inc.'s cost of capital is 11% and the risk-free rate is 5%. The company plans to invest in a new project. The cash flow projections ($000) for the project are given below.

Year

0

1

2

3

4

5

Cash Flow

-500

150

150

150

150

150

CE factor

1

0.9

0.85

0.8

0.75

0.7

Required - Calculate the certainty equivalent NPV ($000).

a. $22.41

b. ($54.38)

c. ($51.22)

d. $51.22

Reference no: EM133057094

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