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Suppose Cold Goose Metal Works Inc is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project
Suppose Cold Goose Metal Works Inc is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Year Cash Flow 5275,000 400,000 Year 2 Year 500,000 450,000 Year 4 Cold Goose Metal Wortes Inc.'s weighted average cost of capital is 94, and project Alpha has the same risk as the firm's average project. Based on the cash flows what is project Alpha's net present value (NPV)? (Note: Do not round your intermediate calculations.) 584346 $1.012619 Making the accept or reject decision Cold Goose Metal Works Inc's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NPV method, it should project Alpha Which of the following statements best explains what it means when a project has an NPV of $0? When a sroject has an HPV of so, the project is earning a rate of return equal to the projects weighted average cost of capital. It's OK to accept a project with an NPV of $0, because the project is earning the required minimum rate of return When a a project has an NPV of so, the project is earning a rate of return less than the project'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 MPV of so, the project is earning a profit of so, a fim should reject any project with an NPV of so, because the project is not profitable
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