Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,500,000. The project is expected to generate the following net cash flows:

Year	Cash Flow
Year 1	$275,000
Year 2	$450,000
Year 3	$450,000
Year 4	$475,000

Cold Goose Metal Works Inc.'s weighted average cost of capital is 8%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?

a. -$878,204

b. -$1,153,204

c. -$678,204

d. $1,346,796

Cold Goose Metal Works Inc.'s decision to accept or reject project Beta is indenpendent of its decisions on other projects. IF the firm follows the NPV method, it should _________ project Beta?

a. accept

b. reject

Suppose your boss has asked you to analyze two mutually exclusive prjoects-project A and project B. Both projects require the same investment amount, and the sum of cash inflows of Project A is larger than the sum of cash inflows of project B. A coworker told you that you don't need to do an NPV analysis of the projects because you already know that project A will have a larger NPV than project B. Do you gree with your coworker's statement?

a. No, the NPV cacluation will take into account not only the projects' cash inflows but also the timing of cash inflows and outflows. Consequently, project B could have a larger NPV than project A, even though project A has larger cash inflows.

b. Yes, project A will always have the largest NPV, because its cash inflows are greater than project B's cash inflows.

c. No, the NPV calculation is based on percentage returns, so the size of a project's cash flows does not affect a project's NPV.