Sorenson Motors (SM) is considering a project that has the following cash flows:

Year Cash Flow

0 Initial Outlay

1) $2,000

2) $3,000

3) $3,000

4) $1,500

The project has a payback period of 2.5 years. The weighted average cost of capital is 12%. Which of the following statements is NOT correct?

a.) Acceptance of this project would increase SM's value by $7,265.91.

b.) The project is expected to generate $1.12 for each $1.00 of investment.

c.) If SM were to accept this project, its shareholders wealth would increase by $765.91

d.) The project is generating more cash than is needed to service its debt, and this excess cash accures solely to SM's stockholders.