RiverRocks, Inc., is considering a project with the following projected free cash flows: ...
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RiverRocks, Inc., is considering a project with the following projected free cash flows:
| year | 0 | 1 | 2 | 3 | 4 |
| Cash flow millions | $-49.9 | $9.9 | $19.7 | $19.1 | $14.3 |
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. RiverRocks' WACC is 12.7 %. Should it take on this project? Why or why not?
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