The Sunshine Corporation is considering an investment proposal in which a working capital investment of $10,000 would be required. The investment would provide cash inflows of $2,000 per year for six years. The working capital would be released for use elsewhere when the project is completed. The company requires a discount rate of 10% and the net present value is ($1,290). Which statement is true?

1)	The present value of cash inflows exceed the present value of cash outflows.

2)	The present value of cash inflows are less than the present value of cash outflows.

3)	The project should be acceptable as the investment would earn above 10%.

4)	None of the above.

T/F

When computing a net present value, you can use the present value of an annuity table for annual cash inflows and annual cash outflow.

In computing a net present value for a capital budgeting decision, cash savings would be treated as a cash inflow and salvage value of an asset would be treated as a cash outflow.

The payback method, the internal rate of return, and the net present value ignores the time value of money.