4. Net present value method

McCall Corp. is evaluating a proposed capital budgeting project that will require an initial investment of $120,000. The project is expected to generate the following net cash flows:

YearCash Flow1$37,6002$50,5003$45,0004$41,900

Assume the desired rate of return on a project of this type is 11%. The net present value of this project _______

Suppose McCall Corp. has enough capital to fund the project, and the project is not competing for funding with other projects. Should McCall Corp. accept or reject this project?

Accept the project

Reject the project