q1

Suppose Green Caterpillar Garden Supplies Inc. Is evaluating a proposed caplal budgeting project (project Alpha) that will require an initial investment of $600,000. The project is expected to oenerate the following net cash flows: Green Caterpillar Garden Supplies inc's weighted average cost of capital is 7%, and project alpha has the same risk as the firm's average prolect. Based on the cash flows, what is project Apha's net present value (NPV)? 51,348,524 51,448,524 5846,524 51,298,524 Making the accept or reject decision Green Caternillar Garden Supplies Inc;'s decision to accept of reject project Apha is independent of its decisions on other projects. If the firm follows the NPV method, it shoudd project Alpha. Which of the following statements best explains what it means when a project has an NPY of $0 ? When a project has an wPV of $0, the project is earning a rate of return equal to the nroject's weighted average cost of capital, it's OK to accept a project with an NPV of $0, because the project is eaming the reguired minimum rate of retarn. Whet a project has an NPV of $0, the project is earning a rate of return less than the prolect's weighted average cost of capital, it's OK to accept the project, as long as the project's profit is positive. When a project has an NPV of $0, the project is earning a profit of 50 . A firm should relect any project with an NPV of 30 , because the project is not profitable