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 criteria that generally lead to good investment decisions. Consider this case: Suppose Happy Dog Soap Company is evaluating a proposed capital budgeting project (project alpha) that will require an initlal investment of $500,000. The project is expected to generate the following net cash flows: Happy Dog Soap Company's weighted average cost of capitar is 10%, and project Apha has the same risk as the firms avecage project, Based on the cash fiows, what is project Alpho's net present value (NPV)? 51,231,963 5306,963 5958,350 appy Dog Soap Company's weighted average cost of capital is 10%, and project Alpha has the same risk as the firm's average project. Based on the iash flows, what is project Alpha's net present value (NPV)? $1,231,963$306,963$968,356$806,963 Making the accept or reject decision Happy Dog Soap Company's decision to accept or reject project Alpha is independent of its decisions on other projects. If the fiem follows the NPV method, it should project Alpho. Which of the following statements best explains what it means when a project has an NPV of so? 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. .t's oK to accept a broject wath an NPV of so, because the project is earning the required minimum rate of return. When a project has an NPV of $0, the project is carning a proft of 30 . A firm should reject any project with an NPV of so, because the project is not prohtable. When a progect has an NPV of so, the project is eamino a rate of return less than the projects weighted average cost of capital. It ok to -ccept the project, as long as the project profa is postive