Assume CAPM holds. Suppose $rf=4\%$ and $E[rm]=9\%.$

The company you work for is trying to make a decision to undertake a project or not. The project has the following cash flows:

$\backslash$table$[[$Time $(t),$Cash Flow$],[0,-1000],[1,0],[2,+500],[3,+500],[4,+500]]$

Given that the company beta is $0\mathrm{.}8,$ what is the net present value $($NPV$)$ of the project?

Would you recommend to invest in the project?

NPV is $193,$ so the company should invest in the project.

NPV is $-193,$ so the company should invest in the project.

NPV is $-193,$ so the company should not invest in the project.

NPV is $193,$ so the company should not invest in the project.