Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $600,000. The project is expected to generate the following net cash flows: Cold Goose Metal Works inc:'s weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on thi cash flows, what is project Alpha's net present value (NPV)? $202,392 $922,751 5802,392 $1,202,392 Making the accept or reject decision Cold Goose Metal Works incis decision to accept or reject project Aipha is independent of its decisions on other projects. If the firm follows the NPV metriod, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of 50 ? When a project has an NPV of $0, 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 tong as the project's profit is positive. When a project has an NPV of 50 , the project is eaming a profit of 50 . A firm should reject any project with an NPV of so, because the project is not profitable. When a projeet has an NoN of $0, the project is earning a rate of return equal to the project's weighted average cost of capital. It's oK to accept a project with an NPV of so, because the project is earning the required minimum rate of retum. Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $600,000. The project is expected to generate the following net cash flows: Cold Goose Metal Works inc:'s weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on thi cash flows, what is project Alpha's net present value (NPV)? $202,392 $922,751 5802,392 $1,202,392 Making the accept or reject decision Cold Goose Metal Works incis decision to accept or reject project Aipha is independent of its decisions on other projects. If the firm follows the NPV metriod, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of 50 ? When a project has an NPV of $0, 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 tong as the project's profit is positive. When a project has an NPV of 50 , the project is eaming a profit of 50 . A firm should reject any project with an NPV of so, because the project is not profitable. When a projeet has an NoN of $0, the project is earning a rate of return equal to the project's weighted average cost of capital. It's oK to accept a project with an NPV of so, because the project is earning the required minimum rate of retum
