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 citeria that generally lead to good investment decisions. Consider this case: Suppose Happy Dog Soap Company is evaluating a proposed capital budgeting project (project Apha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Happy Dog Soep Company's weighted average cost of capital is 9%, and project Alpha has the same risk as the firm's average project: Based an the cash flows, what is project Apha's net present value (NPV)? $742,100 51,192,160 51,142,100 5192,100 Happy Dog Sosp Company's welghted average cost of capltal is 9%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Apha's net present value (NPV)? $742,100$1,192,100$1,142,100$192,100 Making the accept or reject decision Mappy Dog Sosp Company's decision to accept or reject project Apha is independent of its decisions on other projects, If the firm follows the NPV method, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of $07 When a project has an NPV of so, the project is earning a rate of return equal to the project's weighted average cost of capital. It's oK to accept a project with an NPV of so, beceuse the project is eaming the required minimum rate of retum. When a project has an NoV of 50, the project is eaming a rate of roturn less than the project's weighted average cost of capital, Its' oK to sccept the project, as long as the project's profit is positive. When a project has an RPV of s0, the project is earning a grofit of \$0. A firm should reject any project with an NipV of so, because the project is not profithble