Final answer:
To calculate the NPV for Barry Company's project, each cash flow is discounted to present value using the WACC, and then summed. The division of PDV by shares is additional context that may apply to an expansion of the problem, while the firm's investment decision is a separate scenario about effective rates of return.
Step-by-step explanation:
The question involves calculating the net present value (NPV) of a project using the provided cash flow and the weighted average cost of capital (WACC) as details. To determine the NPV, each future cash flow must be discounted back to its present value (PV) using the given WACC (in this case, it's assumed to be 15%). A separate present value calculation must be performed for each distinct time period. Once all present values are calculated, they are summed up to obtain the NPV of the project. If the NPV is positive, the project typically adds value and should be considered. However, if the NPV is negative, the project would destroy value on the firm's balance sheet and generally should be rejected.
If the scenario involves shares, as mentioned in the provided information, the PDV of total profits could potentially be divided by the number of shares to determine the price per share. The example given (51.3 million/200) results in 0.2565 million, or $256,500 per share. However, the original NPV question does not explicitly mention shares, and this may be additional context or a separate calculation.
The final part of the question seems to involve a decision-making scenario where if a firm's cost of financial capital is 9% and it can capture a 5% return to society, it would invest as though its effective rate of return is 4%. The example given states the firm would invest $183 million under those conditions. This is a separate concept from NPV calculation and related to investment decisions based on differential rates of return.