Capital Budgeting Decision Critariat NPV The net present value (NPV) method estimates how much a potential project will contribute to 7 select- and is is the best sclection criterion. The targer the NPV, the more value the project adds; and added value means a higher v stock price. In equation form, the NGV is defined ast Cit is the expected net cash flow at Time L, r is the project's risk-adjusted cost of capital, N is its life, and cash outliaws are treatiod as negative cash flows. The MrV calculabion assumes that cash inflows can be reinvested at the project's risk-adjusted wacc . When the firm is considering independent projects, if the project's NPV excoods zero the firm should acoept the project. When the frm is considering mutually exdusive projects, the firm should accept the project with the highest positive x NoV. Quantitative Problems Bellinger Industries is consldering two projects for indusicn in its capital budget, and you have been asked to do the analysis. Both projects' aftertax eash flows are shown on the time line below. Depreciation, salvage values, net operating worlang capital roquirenents, and tax eflects are all induded in these cash flows. Both projects have 4-year lives, and they have risk doracteristics similar to the firm's averoge project. Bellinger's whcC as T'b. \begin{tabular}{|cccccc|} \hline & 0 & 1 & 2 & 3 & 4 \\ \hline Project A & 1,040 & 680 & 395 & 260 & 310 \\ Proyect B & 1,040 & 280 & 330 & 410 & 760 \\ \hline \end{tabular} What is Project A's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is Project B's NeVI Do not round intermediate calculations. Aound your answer to the nearest cent. If the projects were independent, which project(s) would be accepted? - subed: waved be nocepted. If the projecte were mutually exclusive, which projoct(s) would be accopted? would be accepted