1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Cute Camel Wootcraft Company is evaluating a proposed capitat budgating project (sroject Apha) that will require an initial Investment of $450,000. The project is expected to generate the following net cash flows: Cute Came Wosdcraft Company's weighted average cost of capital is g\%, and project Apha has the same risk as the fim 's average projece. Basod on the cash fiows, what is project Apha's net present value (NPN)? 1694,570 41,269,570 M44,570 13,204,570 Cute Camel Woodcraft Company's weighted average cost of copital is 8%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Aipha's net present value (NPV)? $094,570 51,269,570 544,570 51,294,570 Making the accept or reject decision Cute Camel Wobderaft Company's decision to accept or reject project Npha is independent of its decluions on other projects. If the firm foliows the *ipN method, it should project Aipha. Which of the following statements best explains ahat it means when a project has an NPV of 10? When a project has an NPN of $0, the project is eaming a rate of return less than the project'a wesghted average cost of capital. ft's ox to accept the project, as lang as the project's profit is posivive. When a project has an NFN of 50 , the project is earning a profit of 50,A firm should reject any project with an Noy of 10 , because the project is not profeseder. When a prolect has an fry of 30 , the oroject is eaming a rate of returh equal to the prajects weighted average cost of capital. ftir ox to becept a project with an Nry of $0, because the aroject is earning the required minimum rate of return