The capital budgeting process is comprehensive and is based on certain assumptions, models, and benchmarks. This process often begins with a project analysis. Generally, the first step in a capital budgeting project analysiswhich occurs before any evaluation method is appliedinvolves estimating the ________________? A, B or C

A- Revenues from all new projects

B- Project's expected cash flows

C- Company's net income

Evaluating cash flows with the NPV method.

The net present value (NPV) rule is considered one of the most commonand preferredmethods for identifying good investments.

Consider the following case:

Suppose Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,225,000. The project is expected to generate the following net cash flows:

Year	Cash Flow
Year 1	$350,000
Year 2	500,000
Year 3	450,000
Year 4	500,000

Cute Camels weighted average cost of capital is 8.00%, and project Beta has the same risk as the firms average project. Based on the cash flows, what is project Betas NPV?

A- $-2,972,517

B- $-747,517

C- $-397,517

D- $-297,517

Making the accept or reject decision.

Cute Camels decision to accept or reject project Beta is independent of its decisions on other projects. If the firm follows the NPV method, it should ___________ project Beta.

A- Reject

B- Accept