There are 8 select bars shown above, the choices for each are in order as follows: 1. Bussiness ethics; Shareholders' wealth; Employee benefits 2. Smaller; Larger 3. Higher; Lower 4. rd; rs; WACC 5. Accept; Reject 6. Lowest positive; Lowest negative; Highest positive; Highest negative 7. Neither; Project A; Project B; Both projects A and B 8. Neither; Project A; Project B; Both projects A and B

1. Capital Budgeting Decision Criteria: NPV Capital Budgeting Decision Criteria: NPV NPV The net present value (NPV) method estimates how much a potential project will contribute to select. and it is the best selection criterion. The -Select- the NPV, the more value the project adds; and added value means a -Select- stock price. In equation form, the NPV is defined as: 1+r 1+r CFt is the expected cash flow in Period t, r is the project's risk-adjusted cost of capital, and cash outflows are treated as negative cash flows. The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted -Select- When the firm is considering independent projects, if the project's NPV exceeds zero the firm should -Select- the project. When the firm is considering mutually exclusive projects, the firm should accept the project with the -Select NPV. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellingers WACC is 7% Project A -1,180 670 370 210 260 Project B 1,180 270 305 360 710 What is Project A's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. What is Project B's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. If the projects were independent, which project(s) would be accepted? If the projects were mutually exclusive, which project(s) would be accepted? Select