Apply WACC in

NPV.

Brawn Blenders has the following incremental cash flow for its new project:

Category	T0		T1	T2	T3
Investment	$4,886,000
Net working capital change	$359,000				$359,000
Operating cash flow			$1,731,000	$1,731,000	$1,731,000
Salvage					$439,000

Should Brawn accept or reject this project at an adjusted WACC of

9.71%,

11.71%,

or

13.71%?

Should Brawn accept or reject this project at an adjusted WACC of

11.71%?

(Select the best response.)

A. The project should be rejected because the NPV is negative. The costs exceed the benefits in today's dollars.

B. The project should be accepted because the NPV is positive. The benefits exceed the costs in today's dollars.