1. Net present value (NPV)

Evaluating cash flows with the NPV method 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 Colestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Apha) that will require an instial investment of $450,000. The project is expected to generote the following net cash llows: Celestal Crane Cosneticss weighted average cost of capital is 9%, and project Alpha has the same risk as the firmis average broject. Based on the cash flows, what is project Alpta's net present value (NPV? 3334,341 $784,341 51,184,341 $1,059,341 Celestial Crane Costrietics's weightwd average cost of capital is 9%, and project Alpha has the same risk as the firm's avorage project, Based on the cash flows, what is project Apha's net present value (Noy)? 434,341 5784341 51,184,341 51,059,341 Making the accept of reject decision Celeseat Crane Cosmetbcsis decisionito accept or reject project Aptia is indeperident of its decisions on other projects If the firm follows the Npy method, it should project Alpha. Which of the following ststements beit emplains what it means when a project has an NoV of $0 ? When a projoct has an NPN of \$0, the progect is peatning a profit of $0. A firm ahioufd reject any groject with an Nov of 50 because the project is not politable. When a project has an NBN of so, the project is saming a rate of return lew than the project's weighed average cost of capital. It's ok to accept the projecti as long an the project's profit is positive. accept a puoject,with an NeV of 30, because the projec me earning the requared minimum rate of return. Making the accept or reject decision Celestial Crane Cosmetics's decision to accept or reject project Alpha is independent of its method, it should project Alpha. Which of the follos ments best explains what it means when a project has an NPV When a is an NPV of $0, the project is earning a profit of $0. A firm shou project is not profitable. When a project has an NPV of $0, the project is earning a rate of return less than accept the project, as long as the project's profit is positive. When a project has an NPV of $0, the project is earning a rate of return equal to th accept a project with an NPV of $0, because the project is earning the required mir