1. Net present value (NPv) Evaluating cash flows with the NPV method The net present value (NPV) ruie is considered one of the most common and preferred criberia that generally lead to good investment dedisions Consider this case: Suppose Pheasant Pharmaceuticals is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $4DD,ODD. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $275,DDD Year 2 $500,000 Year 3 $500,000 Year 4 $400,0DD Pheasant Pharmaceuticals's weighted average cost of capital is 8%, and project Alpha has the sa average project. Based on the cash flows, what is project Alpha's net present value (NPV)? e risk as the firm's O $1,169,072 $974,227 O $574,227 O $1,474,227 Making the accept or reject decision Pheasant Pharmaceuticals's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NP method, it should project Alpha. accep reject