Change in wealth because of the discovery of the project

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Reference no: EM131625306

You own 100 out of the 2000 shares of a firm. The firm announces a project today (Year 0) which everyone agrees has a net present value in Year 0 of $1200. The investment in the project, $400, will be made one year from now (Year 1) and the project will conclude (that is, the final cash flows will be realized) in Year 5. Cash inflows in each year (Year 2 to Year 5) are expected to be identical. The cost of capital is 8%.

What is your change in wealth because of the discovery of the project?

Reference no: EM131625306

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