1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (WPV) rule is considered one of the most common and preferred criteria that generally lead to good imvestment decisions. Consider this case: Suppose Lumbering Ox. Truckmakers is evaluating a proposed capital budgeting project (project Alpha) that wil require-an initial investrient of $500,000. The profect is expected to generate the following net cash flows: Lumbering Ox Truckmaikers's weighted average cost of capital is 7%, and project Apha has the same risk as the firm's average project. Based on the cash fiows, what is projed Apha's net present value (NpM)? $1,329,245$1,354,2455454,245$954,245 Making the accept or reject decision Lumbering Ox Truckmakers's decision to accept or reject project Alpha is independent of its decisions on other projects. if the firm follows the. NPV method, it should project Apha. Which of the following statements best explains what it means when a project has an NPV of $0 ? Whet i project has an NPV of 50 , the project is earning a rate of return less than the project's weighted averape cost of capitat. tt's ok to accept the project, as long as the project's profit is positive. When a project has an NPV of 50 , the project is earning a rate of return equal to the profect's welghted average cost of capital. It's OK to accept a project with an NPV of $0, because the project is eaming the requirnd minimum rate of return. When a prolect has an NPV of $5, the profect is eaming a profit of 50 . A firm should reject any profect with an NCly of 50 , because the project is not profitable