Scenario 1 Pet Smart, a pet suppliec, is considering a project to relormulate its most popular line of dog food. As dog owners become more conscious about the quality of the food they feed their dogs, Pet Smart wants to reformulate its dog food with more natural ingredients The initial cost of the project and the expected cash flows are the following The company uses a discount rate of 10 percent to ovaluate its capital budgeting projects: Estimate the payback period 3.26 years 3.78 years 4.62 years 496 years Refer to scenario 1 What is the NPV of the project? Should the company accept it? $62,369.05. Reject because the NPV is negative. $52,927.96. Reject because the NPV is negative. $81,746.85. Accept because the NPV is positive. $87,528.14. Accept because the NPV is positive. $97,485.88. Accept because the NPV is positive. Refer to scenario 1 What is the IRR of the project? Should the company accept it? 11.13%. Accept it because the IRR is less than the cost of capital. 11.13\%. Accept it because the IRR is greater than the cost of capital. 13.47%. Accept it because the IRR is less than the cost of capital. 13.47%. Accept it because the IRR is greater than the cost of capital. 9.25%. Reject it because the IRR is less than the cost of capital. Refer to scenario 1 What is the profitability index? Should the company accept it? 1.04. Accept it because the profitability index is greater than 1. 1.04. Accept it because the profitability index is greater than 0. 1.15. Accept it because the profitability index is greater than 0 . 1.15. Accept it because the profitability index is greater than 1. 0.85. Reject it because the profitability index is less than 0