The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions.

Consider this case:

Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,750,000. The project is expected to generate the following net cash flows:

Year Cash Flow

Year 1 $275,000

Year 2 425,000

Year 3 450,000

Year 4 450,000

Blue Hamster Manufacturing Inc.s weighted average cost of capital is 8%, and project Beta has the same risk as the firms average project. Based on the cash flows, what is project Betas NPV? (Note: Do not round your intermediate calculations.)

A.-$993,013

B.-$4,193,013

C.-$1,443,013

D.-$1,659,465

Blue Hamster Manufacturing Inc.s 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. Accept B. Reject